Hong Kong Police Bent On Finding Mastermind Behind $192 Million JPEX Scandal

Hong Kong’s security minister said the city’s police are bent on finding the mastermind behind the alleged HK$1.5 billion ($192 million) fraud at crypto exchange JPEX.

The case, one of the city’s biggest ever financial frauds, involves 2,392 victims, while police have arrested 12 suspects and seized cash and assets worth more than HK$85 million, Secretary for Security Chris Tang Ping-Keung said at a press briefing.

“Police are doing their best to locate the whereabouts of the leader of the platform,” he said. “This is definitely a major factor in their investigation. We will by all means hold the culprits accountable for their crimes.”

Hong Kong govt vows to locate the leaders of JPEX, the crypto exchange that has become the target of fraud investigation.

But no one, it appears, knows who they are

— ekin (@eking0x) September 27, 2023

The security chief said his ministry and and law enforcement agencies are working closely with the Securities and Futures Commission (SFC) to get to the bottom of the case.

The SFC has said that JPEX was an unlicensed cryptocurrency platform. It utilized well-known social media influencers to help market their offerings to the public.  Celebrities who have worked with JPEX included crypto influencer Joseph Lam and two YouTubers, Chan Wing-yee and Chu Ka-fa, all of whom have been arrested for their association with the exchange.

Why Didn’t Authorities Act Sooner On JPEX Case?

JPEX has been under a high-profile probe by the SFC and police since at least Sept. 13, when the SFC released a statement saying that the exchange was not licensed to operate in Hong Kong. The regulator has faced criticism for failing to alert the public to potential problems at JPEX earlier.

In the SFC’s defense, former commission chairman Anthony Neoh said that the regulator did its best in the JPEX case given the circumstances, the South China Morning Post reported.  “The regulation on virtual assets did not come into effect until June 1 this year, so the commission had no legal powers prior to that,” he said.

He added that the SFC warned the public but “it could be said in retrospect, in hindsight, they should have done more.”

While the Commission was in a position to do more to save investors and stop JPEX earlier, Neoh said that it refrained from doing so for a variety of valid reasons, such as an ongoing investigation into the platform or a need to avoid negatively affecting the investors.

“The regulator made the judgment with the best information or best intent, and I do not believe they acted in any bad faith,” he said, adding that “They acted according to what they believed was the dynamic situation at the time.”

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