19th September 2023 – (Hong Kong) cA recent revelation by the Securities and Futures Commission (SFC) has exposed the unlicensed operation of the crypto asset trading platform “JPEX,” triggering a wave of cryptocurrency fraud. Law enforcement agencies have currently arrested four men and two women on suspicion of conspiracy to defraud, with a staggering 1,408 reported cases and an estimated involvement of around HKD 1 billion. Member of the Legislative Council, Johnny Ng Kit-chong, expressed his concerns during a radio program this morning (19th), revealing that he has received pleas for assistance from dozens of investors, some of whom have suffered losses in the range of millions of Hong Kong dollars. Several individuals have filed reports and provided testimonies, but authorities seem to be struggling to identify the directors and shareholders of the main company involved. If the assets related to the case cannot be frozen, there are fears that the investments of the victims could be lost. Ng believes that the subsequent investigation needs to elevate to an international level, as relying solely on Hong Kong may not suffice.
Ng further highlighted that although the SFC added “JPEX” to its list of suspicious websites last year, the general public remains unaware. Presently, over 100 crypto trading platforms are in operation without obtaining official licenses, and the authorities have failed to provide clear public information on this matter. Conversely, these platforms have engaged in extensive promotional campaigns, including outdoor and transportation advertisements, as well as hiring influencers to endorse their services. This has misled investors into believing that these platforms are licensed institutions or will eventually obtain a licence. Ng suggests that the SFC should promote awareness across different platforms and enhance investor education on virtual assets.
Dr. Billy S.C. Mak, Associate Professor in the Department of Accountancy, Economics, and Finance at the Hong Kong Baptist University, pointed out that currently, only two crypto trading platforms in Hong Kong hold licenses. He compared this incident to the “London Gold” investment case, highlighting that these self-proclaimed “exchanges” are mostly privately owned and not official entities, which raises concerns about their ability to deliver on promises and the associated settlement risks. Even foreign countries have experienced instances of “burned” trading platforms. Dr. Mak believes that the government should learn from this situation and take proactive measures to inspect existing virtual trading platforms for potential risks while strengthening investment education.