Hong Kong’s trust in cryptocurrency assets plunges after JPEX scandal, HKUST survey finds

Attitudes towards virtual assets in Hong Kong have soured following the fallout from allegedly fraudulent platform JPEX, a new survey found, highlighting the challenges the city faces in its efforts to embrace this volatile industry.

From September to October, 41 per cent of Hong Kong people preferred to not hold virtual assets, an increase of 12 percentage points from April to May this year, according to surveys conducted by the School of Business and Management of the Hong Kong University of Science and Technology (HKUST).

HKUST’s surveys also found that this month, in the aftermath of the JPEX scandal, only 20 per cent of respondents said they would like to hold virtual assets in the future, down by five percentage points from earlier this year.

The Hong Kong public’s growing aversion to cryptocurrencies following the implosion of JPEX could pose major challenges to the city’s ongoing initiatives to develop virtual assets and to become a global hub for the industry.

The JPEX cryptocurrency platform, at the centre of a growing HK$1.57 billion (US$200.7 million) financial scandal involving thousands of victims, was the target of one of the city’s most high-profile enforcement actions in the virtual asset sector that saw 28 people arrested over the past month. The ringleaders are still at large.

In recent years JPEX attracted many local retail investors through mass media advertisements promising yields as high as 20 per cent, but the platform halted customer withdrawals last month after Hong Kong’s securities watchdog warned the public of its “suspicious practices”.

Some retail customers lost their life savings on the platform.