22nd September 2023 – (Hong Kong) A company registered in Australia by the troubled cryptocurrency exchange JPEX has submitted an application for voluntary deregistration to the Australian Securities and Investment Commission (ASIC). The move comes just a day after six individuals were arrested in Hong Kong as part of an investigation into suspected fraud involving the platform. The company, named “JP-EX Crypto Asset Platform PTY LTD,” is seeking approval to remove its registration.
In the filing, Jieyi Chen, the director representing the company, stated that all members of the company have agreed to the deregistration. Chen further mentioned that the company is not engaged in any business activities, its assets are valued at less than AUD$1,000 (approximately HK$5,017), and it has no outstanding liabilities or legal proceedings against it. However, it remains unknown whether the ASIC has granted approval for the voluntary deregistration application.
JP-EX Crypto Asset Platform PTY LTD has previously been listed in the alert list of the Hong Kong Securities and Futures Commission. Lawmaker Edmund Wong Chun-sek, representing the accountancy sector, suggested that the company’s action could be an attempt to remove shareholder and director information from public platforms, potentially reducing the chances of being accused of absconding with funds. Wong advised affected investors to seek professional assistance in Australia to file claims against the company.
Meanwhile, Hong Kong police are collaborating with Interpol and overseas virtual asset trading platforms to track and freeze cryptocurrency connected to the largest-ever financial scam in the city, involving approximately HK$1.4 billion (US$179 million) allegedly siphoned off from investors. The police have successfully frozen some of the cryptocurrency associated with the suspected fraud by the JPEX platform and are actively tracing the funds. They have deployed a team to monitor blockchain activities and track digital coin transfers linked to the platform.
Blockchain analytics firms Bitrace and 0xScope have reported unusual outflows of tokens from wallets associated with JPEX, following a warning issued by the Securities and Futures Commission regarding the platform’s suspicious operations. Furthermore, JPEX has imposed high processing fees on user withdrawals, ranging from 955 to 999 USDT (Tether tokens) for every 1,000 USDT withdrawn. Tether is a type of cryptocurrency stablecoin pegged to a stable valuation.
As part of the ongoing investigation, the Hong Kong police’s Commercial Crime Bureau has arrested 11 individuals suspected of conspiring to defraud investors. Notable figures among those arrested include influencers Joseph Lam Chok and Chan Wing-yee. Actor and singer Julian Cheung Chi-lam and Malaysian actress Jacqueline Ch’ng were also questioned by the police but were not arrested.
Investors were enticed to purchase JPC tokens, issued by JPEX, with promises of high returns upon maturity. However, police have revealed that JPC tokens have limited circulation and lack value compared to mainstream cryptocurrencies. Allegedly, JPEX required customers to provide their cryptocurrency’s private keys as collateral in exchange for high returns in JPC tokens.
The police operation has led to raids on multiple over-the-counter shops across Hong Kong, where some victims reportedly purchased mainstream digital coins and traded them for JPC tokens. The investigation is ongoing, and further arrests are possible, with police urging residents to avoid using the JPEX platform for investments. Authorities have notified licensed telecommunications operators to review relevant websites and prevent the transmission of fraudulent messages.
In light of recent developments, scepticism surrounds JPEX’s DAO Stakeholders Dividend Plan, which offers customers the chance to invest in a dividend-paying asset. Concerns have been raised as the plan asks users to become equity owners instead of repaying their assets. Accountancy sector lawmaker Edmund Wong Chun-sek has cautioned individuals to carefully consider their investments and highlighted the absence of guarantees in the DAO scheme.
As the investigation continues, affected investors are advised to act swiftly and seek assistance from professionals to navigate the complex process of filing claims against the company in Australia. The fallout from the JPEX scandal highlights the need for robust regulation in the virtual assets industry, as emphasized by Hong Kong’s leader.