Hong Kong police freeze assets linked to crypto exchange JPEX amid $403m fraud wave

Hong Kong police freeze assets linked to crypto exchange JPEX amid $403m fraud wave
Hong Kong Police Commissioner Raymond Siu said JPEX cost investors $206 million in losses. Credit: Darren Joseph
  • Police make more arrests in investigation of failed crypto exchange.
  • Crypto fraud accounted for more than half the losses on investment platforms in 2023.
  • The JPEX case shows the challenges confronting crypto investors in Hong Kong.

After months of hibernation, the JPEX case in Hong Kong has come back to life.

On April 18, Hong Kong police officials said they froze assets worth more than US$29 million connected to JPEX, a cryptocurrency exchange that collapsed in September.

Police officials also made more arrests, bringing the total number of employees and social media influencers connected to JPEX to 72.

More than 2,600 people lost an estimated US$206 million in JPEX, Police Commissioner Raymond Siu told lawmakers last week.

$764 milliion in losses

The authorities have yet to identify what company or individuals control the defunct exchange, let alone where they may be located. Nobody has been charged.

The challenging case punctuates the struggle to rein in Hong Kong’s freewheeling crypto scene. In 2023, crypto-related fraud accounted for more than half the US$764 million in losses in online and offline investments, according to Commissioner Siu.

Hong Kong’s Securities and Futures Commission, or SFC, has rounded up a number of influential figures who promoted JPEX, including influencer Joseph Lam and Feng Shui expert Clement Chan.

Another unnamed suspect was found destroying documents in a bathtub with bleach.

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Following the launch of the SFC’s probe last year, JPEX staff abandoned their booth at a cryptocurrency conference in Singapore.

Police officials did not disclose details about where the frozen assets were located or whether they were cryptocurrencies or fiat currencies. But the development raises the possibility investigators have made progress.

That would be good news for the SFC. Even as it tries to implement a licensing regime for virtual asset platforms, the agency has faced criticism from lawmakers for not identifying and addressing suspicious platforms.

In response, the SFC has tried to improve its public communication, listing both the status of cryptocurrency platforms applying for licences and those deemed suspicious.

Tracking a CEO

However, the listing of suspicious platforms typically occurs after users suffer losses and file complaints.

This delay was evident in the case of BitForex, another exchange claiming to be based in Hong Kong. Approximately US$57 million was withdrawn from BitForex’s wallets in late February, several weeks after CEO Jason Luo said he was stepping down.

Subsequently, token projects associated with BitForex said they had contacted Luo, who told them he was under investigation in mainland China and that police had moved the assets. DL News has been unable to confirm those reports.

Warnings against scams are ubiquitous across Hong Kong and appear everywhere from university restrooms to residential buildings and metro stations. Mobile networks such as China Mobile HK alert users with a pop-up warning of potential scams when receiving calls from numbers outside the city.

Crypto fraud is becoming an urgent issue across Asia. In Singapore, scam victims lost US$479 million in 2023, a slight decrease from the US$660.7 million reported in 2022, according to officials.

Meanwhile, Malaysia experienced more than 1.63 million scam calls alone last year, doubling the previous year’s total and averaging about one call for every twenty citizens.

Got a story about JPEX or other scam platforms in Hong Kong? Contact Callan Quinn at callan@dlnews.com.