Police received complaints from 1,641 investors as of Monday evening, involving nearly HK$1.2 billion in assets
Eight people have been arrested in connection with the investigations into alleged fraud by JPEX
The financial toll in Hong Kong’s cryptocurrency scandal has risen to HK$1.2 billion (US$154 million) involving more than 1,600 investors, making it the single largest financial fraud case in the city’s history.
Police received complaints from 1,641 investors as of 10.30pm on Monday, involving HK$1.19 billion in assets, including HK$40 million from the biggest victim, the Hong Kong commercial crime bureau’s acting chief inspector Mak Wai-kwong said at a joint press conference with the city’s securities watchdog agency on Tuesday.
Police arrested eight people in connection with investigations into alleged fraud at JPEX, Mak said. Bank accounts with HK$15 million were frozen, and three properties valued at HK$44 million were seized, he said.
the Securities and Futures Commission (SFC) last week issued a public warning against the use of JPEX, which the regulator said was an unregulated cryptocurrency platform that had made false claims about its compliance with local rules.
The company actively promoted its products to the Hong Kong public through social media influencers and key opinion leaders, who incorrectly suggested that JPEX had applied for a cryptocurrency trading platform licence in the city, the SFC said.
A new regulatory framework that came into effect in June gives a one-year grace period to exchanges that already had a large presence in the city to make changes to comply with the rules and apply for a licence to legally offer their services to local retail investors.
The SFC so far has only approved two cryptocurrency exchanges, OSL and Hashkey, which were the only two local exchanges that also received licences from regulators to provide virtual asset trading services to professional investors. The companies said last month that their existing licences had been upgraded to allow them to serve retail investors.
The SFC said it has ramped up investor education efforts over the years in the face of growing risks in the sector. Since it first issued an alert about JPEX in July 2022, the regulator has issued nine warnings through its Investor and Financial Education Council, reminding the public to be mindful of risks involved in investing with unregulated or overseas cryptocurrency exchanges.
When asked whether the SFC should offer more transparency on the licensing statuses of companies, the SFC cannot publish a list of companies that have applied for licences because that would create a “false sense of security”, leading people to believe that all those firms were already fully compliant with the local regime.
The regulator also cannot disclose how many companies have applied for a licence or were denied one.
Police said on Tuesday that they had not ruled out more arrests as their investigation continued. If someone overseas was found to have committed crimes in Hong Kong, the force would extradite them back to Hong Kong, said Lee Mo-yin, superintendent at the Commercial Crime Bureau.
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