Cracking Down: Hong Kong to List ‘Suspicious’ Crypto Platforms in Response to JPEX Scandal - Following the recent JPEX scandal, the Hong Kong Securities and Futures Commission has announced its intention to release a public list of crypto trading platforms that are deemed suspicious.

    The Securities and Futures Commission (SFC), one of Hong Kong’s key financial regulators, has pledged to enhance its efforts in combating unregulated cryptocurrency trading platforms within its jurisdiction. 

    In a statement released on September 25, the SFC announced its intention to publish a comprehensive list of licensed, deemed licensed, closing down, and application-pending virtual asset trading platforms (VATPs). This list aims to assist the public in identifying potentially unregulated VATPs operating in Hong Kong. Furthermore, the SFC will maintain a dedicated list of “suspicious VATPs,” which will be prominently displayed on the regulator’s website for easy access.

    Cracking Down: Hong Kong to List 'Suspicious' Crypto Platforms in Response to JPEX Scandal 1
    Source: Hong Kong SFC

    These new regulations have been sparked by the JPEX crypto exchange scandal, which has been described by local media as one of the most severe cases of financial fraud in the region. Despite not having obtained a license in Hong Kong, JPEX allegedly promoted its services to residents of the country. Christopher “Kit” Wilson, the SFC’s director of enforcement, revealed during a press briefing on September 25 that due to evasive behavior from stakeholders and unsatisfactory responses to information requests, JPEX was placed on the alert list in July 2022.

    This led to a complex investigation involving multiple parties across different jurisdictions, which escalated in April 2023 following an official investor complaint. Wilson explained that a formal fraud investigation commenced after the implementation of the Anti-Money Laundering Ordinance in June 2023. As a result of the investigation, a formal warning was issued on September 13, and the matter was referred to the police.

    The financial impact of the JPEX scandal is estimated to be around $178 million, with over 2,200 complaints received by the local police from affected users of the exchange. Eleven individuals, including cryptocurrency influencers, YouTubers, and employees of the alleged fraudulent crypto exchange, have been detained for questioning.

    The SFC emphasized that the fallout from JPEX underscores the risks associated with dealing with unregulated VATPs and highlights the necessity for proper regulation to maintain market confidence. The regulators also announced their collaboration with the local police in establishing a dedicated channel for citizens to report suspicious activity and potential legal breaches by VATPs.

    Additionally, they expressed their commitment to further investigating the JPEX incident to ensure that those responsible are held accountable.

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