Hong Kong authorities are taking steps to tighten regulations on the cryptocurrency market following the arrest of six individuals connected to an alleged fraud involving an unlicensed crypto exchange named JPEX.
The Chief Executive of Hong Kong, John Lee Ka-chiu, announced on September 19th that the government would intensify its efforts to educate investors and remind them to use only platforms that have obtained licenses from the Securities and Futures Commission (SFC).
The JPEX case gained attention when the SFC revealed that it had received over 1,000 complaints related to unregistered crypto exchange platforms. These complaints alleged collective losses of over $128 million (1 billion Hong Kong dollars) due to fraudulent activity on the platform.
The SFC’s warning highlighted that JPEX had been actively promoting its services and products to the Hong Kong public, often through online celebrities and over-the-counter money changers.
Hong Kong Cracks Down on Cryptocurrency Market Amid JPEX Scandal
As the issues surrounding JPEX became public, many users found themselves unable to withdraw their funds, and others reported reduced wallet balances. In response to the SFC’s warning, JPEX reportedly raised its withdrawal fee to $10,000 to discourage users from withdrawing their assets.
Subsequently, the exchange blamed third-party market makers for the liquidity crisis that led to the increased withdrawal fee. The Hong Kong police also arrested influencer Joseph Lam (Lin Zuo) for his association with JPEX.
Hong Kong has been positioning itself as a growing hub for cryptocurrency in 2023, working on various pro-crypto legislation and opening up crypto trading to retail customers. However, unlicensed platforms like JPEX have taken advantage of the lack of knowledge and awareness among users. Regulatory authorities are now working to educate the public about using only licensed platforms for their crypto trading activities.