JPEX scammed Hong Kong investors from day one through shady cash deals


26th September 2023 – (Hong Kong) The unfolding JPEX fraud saga has exposed how the cryptocurrency platform planned to scam Hong Kong investors right from the start, using underhanded cash-based marketing tactics to gain traction.

With police having made 11 arrests so far, investigations reveal JPEX relied on opaque cash payments to buy advertisements and influencer promotions, while outsourcing development of its systems to a software firm. Its deceptive practices were premeditated rather than emerging over time.

In mid-September, Hong Kong’s Securities and Futures Commission (SFC) warned investors that unlicensed JPEX was making false claims and using social media influencers to promote high-return savings products. The SFC had JPEX affiliates on its alert list since mid-2021.

JPEX aggressively promoted itself across MTR stations starting over two years ago. Actor Julian Cheung appeared in ads last August, though his agent says they never agreed to this before JPEX was licensed. JPEX also hired Taiwan celeb Nine Chen for campaigns there this year. But its owners’ identities and locations remain unclear due to corporate opacity.

Like JPEX’s site, four related over-the-counter (OTC) crypto platforms – CYOTC, CryptoPARD, Coingaroo and Coiner – are now inaccessible here without VPNs, indicating likely police blocking after declaring JPEX a “fraud syndicate”.

Company records reveal no direct JPEX links. Some shops are directly held by “influencers” or arrestees, while others have hidden shareholders and directors. Henry Choi’s Hong Coin trademark is registered to model agency boss Ray Ng Shing-chun who runs Model Genesis in Sheung Wan and co-founded FAYE rooftop bar in LKF.

A JPEX-touting blockchain summit in August was organised by crypto publication BlockDailyHK. It vanished after JPEX’s troubles emerged, alongside listed speakers like Duncan Chiu. Though JPEX claimed to be a “Japanese exchange”, it has no Japan links. JPEX plastered huge ads across MTR stations starting in 2022. MTR claims it rejected JPEX ads after June and told agents to increase monitoring.

Some media reps admitted to accepting JPEX ads via obscure “third parties” paid fully in cash, untraceable to any company. JPEX’s website, apps and trading systems were developed by a Lai Chi Kok software firm whose clients include universities, government bodies and trade groups. Engineers who worked on JPEX projects there also handled OTC shop sites. But the company did not respond to inquiries.

Another JPEX tactic flagged by the SFC was collaborating with listed firms, but the MoUs yielded zero outcomes. The shortest pact lasted just one month before termination. The listed companies that previously issued voluntary announcements of understanding memorandum include HMVOD (8103), Harmony Asset China (428), and Synertone Comm (1613). The shortest period for the cooperation agreement to be terminated was one month, indicating that there were no actual results from the so-called collaboration.

Synertone Communications (1613) saw its stock price spike 133% in one day after announcing a JPEX agreement. It later clarified its supposed JPEX subsidiary was unrelated to the scam probe entity, after securing consent to use a similar name for sales and marketing.

The shady marketing arrangements, from engaging influencers to linking up with listed firms, reveal JPEX’s premeditated plan to scam Hong Kong investors. Its reliance on deceptive cash payments for ads and opaque corporate setup point to scam intentions from day one, not evolving over time.

Authorities must unravel this complex web of shadowy practices that facilitated the HK$1.49 billion fraud. And loopholes allowing cryptocurrency platforms to systematically exploit cash and influence for promotion must be closed to protect the public.