Hong Kong to keep tabs on cryptocurrencies
Securities regulator seeks tightening regulation of cryptocurrencies after arrests linked to JPEX trading platform
image for illustrative purpose
The arrests of the 8 followed an announcement by the SFC last week that JPEX was unlicensed and did not have authority to operate its cryptocurrency trading platform in the city
SFC Actions
• Impacted more than 1,600 investors and over $150 mn in assets
• Arrested include social media influencers who promoted the JPEX
• Frozen bank accounts worth $1 mn and seized 3 properties valued $5.6 mn
Hong Kong: Hong Kong's leader said Tuesday that the territory will scrutinise the regulation of digital assets after police arrested eight people over allegations of fraud at an unlicensed cryptocurrency exchange that impacted more than 1,600 investors and over $150 million in assets.
Those arrested include social media influencers who promoted the JPEX currency exchange and JPEX employees, police said. “This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed,” Hong Kong chief executive John Lee said at a regular news conference. “The SFC will monitor the situation very closely and ensure that investors are sufficiently protected.” He said the government will step up education so investors will better understand the risks involved and how platforms are regulated. Police Senior Superintendent Kung Hing-fun said the investors were mostly inexperienced and had fallen for promises of high yields and low risks. Elizabeth Wong, head of the Securities and Futures Commission's fintech unit, said it was investigating whether JPEX had violated the anti-money laundering ordinance, and that it had referred the case to police and would assist in their investigation.
The arrests of the eight followed an announcement by the SFC last week that JPEX was unlicensed and did not have authority to operate its cryptocurrency trading platform in the city. It said some investors had complained of being unable to withdraw their virtual assets from JPEX accounts or of finding their balances were “reduced and altered.” JPEX announced Monday that it was suspending trading on its platform. It said in a statement that it was “negotiating with … third-party market makers to resolve the liquidity shortage.”
