22nd September 2023 – (Hong Kong) The recent Hong Kong enforcement action against cryptocurrency platform JPEX amid fraud allegations has shocked the city. With over 2,000 investors affected and losses totalling a staggering HK$1.3 billion, this marks Hong Kong’s biggest financial scam on record. So far 11 individuals have been arrested, but the masterminds remain at large and victims are unlikely to recover much money.
While the perpetrators clearly deserve condemnation, the irresponsible actions of celebrities endorsing JPEX also require scrutiny. Their status lent credibility to the scam, duping countless citizens into making risky investments without proper understanding. This saga highlights the need for stricter rules on celebrity crypto promotions to protect unwary investors.
Reckless celebrity endorsements
Various Hong Kong celebrities enthusiastically promoted JPEX across social media. Their glowing words, images and endorsements deliberately portrayed it as a reliable platform for effortless crypto earnings.
Actor and singer Julian Cheung shot commercials and advertisements for JPEX during March and September 2022, falsely implying it was an above-board business. His images continued to be shared even after JPEX was named on the Securities and Futures Commission (SFC) alert list lent unwarranted credibility.
Social media influencer Joseph Lam Chok actively touted the platform on his accounts as a path to easy riches, encouraging citizens to “invest big to earn big”. His videos depicted him profiting hugely from JPEX, misleading followers into thinking they could do the same.
TVB actress Jacqueline Ch’ng also allegedly promoted the platform extensively. Her continued support despite JPEX lacking a licence boosted its credibility.
These celebrities’ glowing endorsements convinced many citizens that investing in JPEX was safe and profitable. In reality, they were just shilling for payment without conducting proper due diligence. Their status and reach enabled the scam to ensnare so many victims.
Negligent and unethical
The behaviour of these celebrities can be branded as irresponsible at best, and unethical at worst. Their powerful influence over citizens imposes a duty of care around endorsements. Promoting unlicensed, high-risk crypto platforms to unsophisticated investors without scrutiny is negligent.
Additionally, some allegedly continued endorsing JPEX even after its lack of SFC licence was public knowledge. This smacks of deliberately ignoring warning signs and prioritising commissions over ethics. Citizens regarded them as role models and trusted their guidance, only to suffer huge losses.
Finally, some promoters have refused to address allegations of involvement or apologise to misled investors. This lack of accountability is unacceptable – dodgy endorsements enabled the scam and should be owned up to rather than evaded. Their regret and apologies, while unlikely to recover losses, would at least show contrition.
Stricter rules needed
This saga demonstrates that Hong Kong urgently requires stricter regulations on celebrity cryptocurrency endorsements to protect investors. Celebrities must face consequences for negligent or unethical promotions. Various measures could help safeguard citizens:
- Requiring clear disclosure of any compensation for endorsements, to alert investors they are advertisements rather than impartial recommendations.
- Mandating celebrities conduct proper due diligence before endorsements, including ensuring crypto firms are licensed and legitimate. Reckless promotions should lead to penalties.
- Banning endorsements of particularly high-risk, speculative cryptocurrencies altogether rather than just disclosure, given celebrities’ outsize influence.
- Introducing “cooling off” periods after celebrities declare crypto investments, before allowing endorsements. This prevents hype-fuelled pumping and dumping.
- Enforcing additional transparency around crypto celebrity influencers’ own token holdings. This reveals vested interests colouring their endorsements.
The sheer recklessness of celebrities fuelling the JPEX scam with misleading hype demonstrates the need for action. Stronger rules would force celebrities to promote crypto responsibly and ethically, not just chase commissions. This helps ensure endorsements inform rather than endanger Hong Kong citizens, protecting unwary investors from scams.
Learn from global precedents
As other countries have grappled with similar issues, Hong Kong can draw lessons from their responses. Celebrity crypto endorsements have frequently stoked controversies worldwide:
- In the U.S., Kim Kardashian was sued for touting the EthereumMax token amid allegations of an illegal pump-and-dump scheme. This demonstrated the powerful but potentially irresponsible influence celebrities wield over crypto markets.
- Boxer Floyd Mayweather and DJ Khaled were fined by U.S. regulators for unlawfully promoting crypto assets without properly disclosing promotional payments. This signalled that opaque celebrity endorsements could breach laws.
- The U.K. Advertising Standards Authority banned crypto advertisements featuring celebrities, after finding they took advantage of consumers’ inexperience to drive risky investments. This underscores how celebrity crypto ads can exploit vulnerability.
These cases exemplify different issues arising from celebrity crypto endorsements, from market manipulation to inadequate transparency to exploiting consumers’ lack of understanding. They provide precedents Hong Kong can reference in crafting its own regulations to stamp out misconduct. Celebrities have proven willing to recklessly hype crypto for profit globally – Hong Kong needs to lead in reining them in.
Celebrity wake-up call
The JPEX saga should serve as a wake-up call to Hong Kong celebrities regarding crypto endorsements. They cannot shill tokens randomly without scrutiny, then evade responsibility when things unravel. If celebrities wish to keep endorsing crypto, they must commit to the following:
- Performing extensive due diligence on any platform’s legitimacy before endorsement
- Providing fulsome, granular disclosures of their paid partnerships
- Ensuring they genuinely understand the assets they are endorsing, and accurately represent their workings and risks
- Pledging not to inflate hype irresponsibly when endorsing high-risk assets
- Committing to be transparent and accountable if endorsed platforms prove problematic.
The enormous losses inflicted by JPEX show the power but also danger of reckless celebrity crypto endorsements. Celebrities must learn from this scandal and endorse mindfully and ethically going forward. With great fame comes great responsibility.
