Hong Kong's long-running JPEX cryptocurrency scandal has seen further developments, with police charging 16 individuals more than two years after the initial arrests. Among those charged is influencer Joseph Lam Chok, facing accusations of fraud, money laundering, and inducing investment in unlicensed virtual asset products.
Interpol has issued Red Notices for three additional suspects believed to have fled the city. Investigators revealed that JPEX had marketed itself as a low-risk exchange but utilized over-the-counter (OTC) operators and social media influencers to attract investors, who subsequently encountered difficulties withdrawing their funds.
The scandal has impacted over 2,700 victims, who collectively lost an estimated HK$1.6 billion (US$205 million). This figure represents a substantial amount, far exceeding previous cases within Hong Kong's fintech sector.
From Promotion to Prosecution
JPEX commenced operations in 2020, aggressively marketing itself with billboards across Hong Kong that promised "safe and easy" cryptocurrency profits. Regulators later confirmed that the platform had never obtained a license under the city's new virtual asset framework.
In 2023, users began reporting delays in withdrawals, and fees escalated significantly, reaching 999 Tether, which effectively froze user funds. By September of that year, police had arrested 11 individuals. This group included YouTubers Chan Wing-yee (“Chan Yee”) and Chu Ka-fai, who had actively promoted JPEX to their subscriber bases.
Authorities allege that JPEX's operators engaged in money laundering of proceeds through numerous wallets, converting cryptocurrency into cash, vehicles, and offshore accounts. The ongoing investigation has expanded, leading to 80 arrests, and police have reported seizing HK$228 million in assets.
Chief Superintendent Ernest Wong Chun-yue characterized the probe as "highly complex," requiring extensive data analysis, digital forensics, and collaboration with the Securities and Futures Commission, which had previously identified JPEX as an unregulated entity.
The Fall of Joseph Lam: From Influencer to Defendant
Joseph Lam Chok, once recognized for his opulent lifestyle and significant social media presence, emerged as the prominent public figurehead of Hong Kong's cryptocurrency boom. He is now considered its most significant cautionary tale.
Lam, who transitioned from an insurance agent to an influencer, actively promoted JPEX to his substantial online following, describing it as a "safe and high-yield" cryptocurrency exchange. His endorsements, coupled with JPEX's conspicuous marketing campaigns displayed throughout Hong Kong, contributed to attracting thousands of retail investors to the platform.
Lam now faces accusations of fraudulently inducing investment and laundering funds. These charges represent a stark departure from his previous image as a cryptocurrency success story. Local reports indicate that police traced luxury purchases and unexplained cash flows to Lam and other promoters, raising critical questions regarding the accountability of influencers within Hong Kong's digital asset market.
His prosecution could establish a significant precedent, not only for unlicensed exchanges but also for the social media personalities who profit from their promotion.
Hong Kong and the Global Laundering Network
The timing of Hong Kong's enforcement actions coincides with a broader international effort to combat cryptocurrency-based money laundering. Recently, the U.S. Treasury Department sanctioned eight individuals and two entities linked to North Korea's cybercrime operations. These included the First Credit Bank and Korea Mangyongdae Computer Technology Company (KMCTC), both accused of laundering cryptocurrency for the regime's weapons program.
Over the past three years, North Korean hackers have reportedly stolen more than $3 billion in cryptocurrency. They have employed tactics such as using fake identities, IT-worker schemes, and proxy accounts to transfer funds through exchanges and shell companies. These methods bear similarities to the operations of Hong Kong's JPEX OTC network.
The necessity for global Anti-Money Laundering (AML) coordination is no longer a theoretical concern; it is becoming an essential requirement for the future of cryptocurrency.
The Road Ahead: Stronger Oversight, Fewer Loopholes
Hong Kong's Anti-Money Laundering and Counter-Terrorist Financing Ordinance, which was updated in 2022, has been invoked for the first time in connection with the JPEX charges. This legislation empowers regulators to prosecute individuals who "fraudulently or recklessly induce others to invest in virtual assets."
Analysts suggest that this case is likely to influence the future enforcement of AML and investor-protection measures across Asia. This is particularly relevant as other jurisdictions, including the EU's MiCA framework and the U.S. Treasury's GENIUS Act, are moving towards implementing stricter requirements for identity verification, transaction monitoring, and exchange licensing.