While the JPEX scandal is still under investigation, Hong Kong authorities are being scrambled to deal with what is seen as the biggest financial fraud in the city's history.
JPEX, a Dubai-based company, was established in 2019 and operates in Hong Kong since July 2020. Its Hong Kong office was raided earlier this month, trapping millions of investors' crypto.
Its collapse has been compared to FTX, but the unravelling of JPEX in Hong Kong has several key differences. It's still not clear who is running it, and for one, it's not clear who has been running it. And few industry experts had heard of JPEX before, beyond its city-wide advertising campaigns.
As authorities rush to find the missing and so far unknown culprits and appease angry investors, the impact of the crypto-friendly Asian hub has been far-reaching. The government said that more than 2,300 people were hurt by the fires.
The JPEX scandal has resulted in the removal of numerous over-the-counter crypto shops that were particularly popular with visitors from mainland China.
On September 13 the Securities and Futures Commission in Hong Kong warned the public that JPEX was not licensed to operate in the area and reflected alleged violations of sections of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance.
On September 17, JPEX blamed third-party market makers for its liquidity crisis and its consequent fee rise. The company said it was going to return everything to normal.
Besides Chok, two YouTubers - Chan Wing-yee and Chu Ka-fai - were arrested.
John Lee, Hong Kong Chief Executive, highlighted the need for firms to adhere to licensing regulations.
There have been only four exchanges applying for licenses ahead of a 2024 deadline: HKBitEx, Hong Kong BGE, HKVAX, and Victory.
As a researcher at DL News, Tyler Pearson is a frequent contributor. He is based in Alberta, Canada.