After just
three months of easing cryptocurrency regulations in Hong Kong, authorities are
already discussing tightening them again. In the wake of alleged fraud at JPEX,
an unlicensed cryptocurrency exchange in the Chinese special administrative
region, authorities are taking stringent measures to regulate digital assets.
Six individuals have been arrested, and the Securities and Futures Commission
(SFC) has received many complaints against the platform, leading to calls for
tighter supervision.
The SFC had
already warned the public about JPEX’s unlicensed status before the arrests
were made. Over 1,400 complaints have been lodged against the exchange,
implicating more than HKD 1 billion ($127.9 million) in losses. Apart from
this, some investors have reported issues related to withdrawing their virtual
assets or finding their balances manipulated.
Moreover,
Finance Magnates reported yesterday (Monday) that local police arrested the financial
influencer Joseph Lam Chok in connection with his online activities promoting
the platform. The arrest came just hours after the beleaguered exchange
confirmed the suspension of trading activities following an investigation by
the SFC.
Hong Kong’s Social Media Sensation, Joseph Lam, Arrested in Daring HK$34 Million JPEX Crypto Scandal! pic.twitter.com/zSUlXRZRTM
— Crypto University (@TheCryptoU) September 18, 2023
According
to the Associated Press, the regulator may go a step further and is
currently considering tightening cryptocurrency regulations to prevent similar
situations in the future. It’s worth noting that Hong Kong only recently
relaxed rules concerning cryptocurrency trading, allowing retail investors to
re-enter the market.
Just In ⚡Hong Kong’s Chief Executive Calls for Tighter Crypto Regulations Citing JPEX Saga 🇭🇰#HongKong#Crypto#cryptocurrencies #Cryptoinvesting #bitcoin#JPEX #WSJTakeOnTheWeek pic.twitter.com/GiKyT7ZgzZ
— LIGHT ┃ NEWS (@LIGHTCRYPT01) September 19, 2023
JPEX Clients Left in the
Lurch
According
to some complaints, investors were unable to withdraw their digital assets from
their JPEX accounts. In certain instances, account balances were mysteriously
altered. Hong Kong’s Chief Executive, John Lee, emphasized the need to educate
investors on using only SFC-licensed platforms for trading.
JPEX has
temporarily suspended trading and is reportedly in talks with third-party
market makers to resolve liquidity issues. The exchange released a statement
accusing unspecified institutions in Hong Kong of treating it unfairly and
alleging that a partnered third-party market maker had frozen its funds.
“Due to the third-party market makers restricting our liquidity and to comply with policy guidelines, all transactions on our Earn Trading interface will be delisted on September 18, 2023, at 00:00 (GMT+8),” the troubled exchange commented in its blog post. “During this period, our dedicated withdrawal team responsible for handling emergency withdrawal requests will continue to prioritize users’ needs.”
The Platinum sponsor, JPEX, abandoned their booth at #Token2049 on the second day. 👀
On a side note, their logo looks quite similar to FTX. Is that a sign? 🤔 pic.twitter.com/KZw9o5vNgF
— J O Y (@joyxspacelatte) September 14, 2023
The SFC
began accepting license applications from cryptocurrency exchanges starting
June 1. Until then, only professional investors could access such trading
platforms. However, only two exchanges have received approval to date: OSL
Exchange and Hashkey Exchange.
The latest
issues surrounding JPEX, which may have solvency problems, could slow down Hong
Kong’s ambitions to become a new cryptocurrency hub. Several well-known
companies, including Binance, have recently taken a chance on the region.
SFC Warned against
Improper Practices before
As it turns
out, the SFC in Hong Kong observed a rise
in improper activities by some unlicensed virtual asset trading platforms a
month before JPEX issues emerged.
The
regulator highlighted four main issues:
- misinformation about obtaining
cryptocurrency licenses in Hong Kong, - non-compliance with local regulations,
- companies operating without the required authorizations,
- a specific warning to retail investors.
As Hong
Kong’s interest in cryptocurrencies grows, unregulated activities are also rising.
The cryptocurrency exchange
OKX recently gained 10,000 users for its local
mobile app within a month. Well-known platforms like Gate.io had entered the
Hong Kong market even before regulations were enacted, keen on capturing the
local trading scene.
After just
three months of easing cryptocurrency regulations in Hong Kong, authorities are
already discussing tightening them again. In the wake of alleged fraud at JPEX,
an unlicensed cryptocurrency exchange in the Chinese special administrative
region, authorities are taking stringent measures to regulate digital assets.
Six individuals have been arrested, and the Securities and Futures Commission
(SFC) has received many complaints against the platform, leading to calls for
tighter supervision.
The SFC had
already warned the public about JPEX’s unlicensed status before the arrests
were made. Over 1,400 complaints have been lodged against the exchange,
implicating more than HKD 1 billion ($127.9 million) in losses. Apart from
this, some investors have reported issues related to withdrawing their virtual
assets or finding their balances manipulated.
Moreover,
Finance Magnates reported yesterday (Monday) that local police arrested the financial
influencer Joseph Lam Chok in connection with his online activities promoting
the platform. The arrest came just hours after the beleaguered exchange
confirmed the suspension of trading activities following an investigation by
the SFC.
Hong Kong’s Social Media Sensation, Joseph Lam, Arrested in Daring HK$34 Million JPEX Crypto Scandal! pic.twitter.com/zSUlXRZRTM
— Crypto University (@TheCryptoU) September 18, 2023
According
to the Associated Press, the regulator may go a step further and is
currently considering tightening cryptocurrency regulations to prevent similar
situations in the future. It’s worth noting that Hong Kong only recently
relaxed rules concerning cryptocurrency trading, allowing retail investors to
re-enter the market.
Just In ⚡Hong Kong’s Chief Executive Calls for Tighter Crypto Regulations Citing JPEX Saga 🇭🇰#HongKong#Crypto#cryptocurrencies #Cryptoinvesting #bitcoin#JPEX #WSJTakeOnTheWeek pic.twitter.com/GiKyT7ZgzZ
— LIGHT ┃ NEWS (@LIGHTCRYPT01) September 19, 2023
JPEX Clients Left in the
Lurch
According
to some complaints, investors were unable to withdraw their digital assets from
their JPEX accounts. In certain instances, account balances were mysteriously
altered. Hong Kong’s Chief Executive, John Lee, emphasized the need to educate
investors on using only SFC-licensed platforms for trading.
JPEX has
temporarily suspended trading and is reportedly in talks with third-party
market makers to resolve liquidity issues. The exchange released a statement
accusing unspecified institutions in Hong Kong of treating it unfairly and
alleging that a partnered third-party market maker had frozen its funds.
“Due to the third-party market makers restricting our liquidity and to comply with policy guidelines, all transactions on our Earn Trading interface will be delisted on September 18, 2023, at 00:00 (GMT+8),” the troubled exchange commented in its blog post. “During this period, our dedicated withdrawal team responsible for handling emergency withdrawal requests will continue to prioritize users’ needs.”
The Platinum sponsor, JPEX, abandoned their booth at #Token2049 on the second day. 👀
On a side note, their logo looks quite similar to FTX. Is that a sign? 🤔 pic.twitter.com/KZw9o5vNgF
— J O Y (@joyxspacelatte) September 14, 2023
The SFC
began accepting license applications from cryptocurrency exchanges starting
June 1. Until then, only professional investors could access such trading
platforms. However, only two exchanges have received approval to date: OSL
Exchange and Hashkey Exchange.
The latest
issues surrounding JPEX, which may have solvency problems, could slow down Hong
Kong’s ambitions to become a new cryptocurrency hub. Several well-known
companies, including Binance, have recently taken a chance on the region.
SFC Warned against
Improper Practices before
As it turns
out, the SFC in Hong Kong observed a rise
in improper activities by some unlicensed virtual asset trading platforms a
month before JPEX issues emerged.
The
regulator highlighted four main issues:
- misinformation about obtaining
cryptocurrency licenses in Hong Kong, - non-compliance with local regulations,
- companies operating without the required authorizations,
- a specific warning to retail investors.
As Hong
Kong’s interest in cryptocurrencies grows, unregulated activities are also rising.
The cryptocurrency exchange
OKX recently gained 10,000 users for its local
mobile app within a month. Well-known platforms like Gate.io had entered the
Hong Kong market even before regulations were enacted, keen on capturing the
local trading scene.
