Hong Kong grapples with fallout of biggest crypto fraud

Hong Kong grapples with fallout of biggest crypto fraud

The Hong Kong government is grappling with the fallout of what is seen as the biggest financial fraud in the city's history, with the JPEX scandal still engulfing the city.

JPEX, a Dubai-based firm, was established in 2019 and has been operating 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 with FTX, but the collapse of JPEX in Hong Kong has several key differences. It's still not clear who runs the site, he said. Many industry insiders had never heard of JPEX, even before its city-based advertising campaigns.

As authorities rush to find the missing - and so far, unknown - culprits and apease angry investors, the impact on the crypto-friendly Asian hub has been far-reaching. According to authorities, more than 2,300 people have been killed.

The JPEX scandal has resulted in the closure of many 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 declared JPEX was not licensed to operate in the region and highlighted 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 therefore increased fees. The company vowed to return all things to normal within a short period of time.

A YouTuber, Chan Wing-yee and Chu Ka-fai, were arrested alongside Chok.

The CEO of Hong Kong, John Lee, emphasised the need for firms to follow licensing regulations.

Of those interested, only four exchanges have applied for licences ahead of the 2024 deadline: HKBitEx, Hong Kong BGE, HKVAX, and Victory.

DL News Researcher Tyler Pearson is a journalist and columnist. He is based in Alberta, Canada.