Hong Kong prosecutors have charged 16 people in connection with an alleged $205.8 million cryptocurrency fraud tied to the JPEX trading platform, in what police described as the city’s largest financial crime to date. Those charged include Joseph Lam, a former lawyer and social media influencer, and several over-the-counter crypto traders accused of promoting JPEX to retail investors. Police said more than 2,700 investors were defrauded, with total losses exceeding HK$1.6 billion. Charges include conspiracy to defraud, fraudulent inducement to invest and money laundering, according to the South China Morning Post. Six of the accused are believed to have been core members of JPEX’s operations, while the rest acted as promoters or intermediaries.
Investor Takeaway
The JPEX case underscores Hong Kong’s push to tighten oversight of crypto trading after years of unregulated activity and aggressive online promotion.
Interpol Issues Red Notices
Authorities said Interpol has issued red notices for three fugitives—Mok Tsun-ting, Cheung Chon-cheong and Kwok Ho-lun—who are believed to have played central roles in the operation. A red notice is a request to locate and provisionally arrest a suspect pending extradition. Police said JPEX misrepresented itself as a licensed exchange while operating without approval under Hong Kong’s digital asset regulations. Since the investigation began in September 2023, more than 80 people have been arrested and HK$228 million in assets seized, including cash, luxury property and digital wallets. The defendants are scheduled to appear in Eastern Court on Thursday. This is the first time Hong Kong has applied its Anti-Money Laundering and Counter-Terrorist Financing Ordinance to a cryptocurrency-related prosecution.
Government Push for Stricter Oversight
The case has reignited debate over investor protection in Hong Kong’s digital asset sector. Chief Executive John Lee said the government must “do more public education for investors to know the risks” and will press ahead with a licensing regime for virtual asset platforms. The Securities and Futures Commission (SFC) introduced new rules in June 2023 requiring exchanges serving Hong Kong investors to obtain licenses. JPEX had applied but was never approved, and regulators later warned the public that the platform was unlicensed and potentially fraudulent. The case has become a test for Hong Kong’s attempt to restore confidence in its ambition to become a regulated crypto hub. Following the collapse of FTX and other offshore exchanges, authorities have sought to attract digital asset businesses while assuring investors that oversight will match international standards.
Investor Takeaway
The JPEX fallout highlights the gap between Hong Kong’s crypto ambitions and regulatory enforcement, with the new licensing regime set to define how far the city will go in balancing innovation and investor safety.
Broader Implications for Hong Kong’s Crypto Sector
JPEX’s collapse dealt a blow to Hong Kong’s effort to attract digital asset firms, coming just months after officials promoted the territory as a regional hub for compliant exchanges. Industry figures said the scandal could lead to tougher screening and slower approvals for new entrants, particularly those marketing to retail investors. Financial analysts say the crackdown could push smaller over-the-counter crypto operators to exit or consolidate. Several Hong Kong-based influencers who once promoted digital asset products have deleted marketing content or suspended campaigns. “The message is clear—licensing is not optional,” one compliance consultant said. While the charges mark a milestone in enforcement, a lengthy trial is expected given the scale of the alleged fraud and the number of defendants. The outcome will likely set a precedent for how Hong Kong handles large-scale crypto-related crimes under its new financial regulations.