Two citizens, Chan Wing-yan and Herbert Lee Sun-him, have filed the first civil lawsuit against the cryptocurrency platform JPEX, seeking to recover approximately 240,000 units of tether, worth about HK.85 million. This marks the first civil lawsuit since the alleged fraud was uncovered nine months ago. The plaintiffs allege unauthorized transfers of their funds shortly […]
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Report: Hong Kong Crypto Exchange JPEX Converts Users’ Funds to an Illiquid Digital Token
The Hong Kong cryptocurrency exchange JPEX recently converted user funds to a native token known as JPC. According to JPEX, affected users will only be able to cash this token out after two years. One affected user said the crypto exchange did not inform them of the conversion rate used to complete this transaction.
Conversion Supposedly Backed by 68% of Users
The beleaguered Hong Kong cryptocurrency exchange, JPEX, has reportedly proceeded with its controversial plan of converting users funds to its in-house digital token known as JPC. As part of the exchange’s plan, users whose assets were converted to the currently illiquid token will only be able to redeem their funds in two years.
The exchange said converting user funds will help it boost its cash flow position and retain investors. JPEX also claimed that the plan had been endorsed by 68% of user. However, according to a report in the South China Morning Post (SCMP), some users of the exchange platform said they were not consulted. Others said they only became aware of this after JPEX unilaterally converted their digital assets.
As previously reported by Bitcoin.com News, JPEX was forced to suspend some trading activities after several people linked to the exchange were arrested by local law enforcement. At the time of the arrests, Hong Kong police claimed to have received 1,641 complaints about JPEX involving 3 million.
However, the SCMP’s Oct. 4 report said that this figure has since grown to 1 million. The report also revealed that a television actor known as Cheng Chun-hei is one of the two suspects who were arrested on the same day.
Users Unaware of Conversion Rate Used
Meanwhile, an unnamed victim of what is now being described as one of Hong Kong’s biggest fraud cases is quoted in the report confirming the conversion.
“All of my USDT [Tether tokens] and other cryptocurrencies are gone, all transferred to JPC [the platform’s own digital currency] … Some other users holding the tokens and other assets have also found them transferred,” the anonymous fraud victim said.
The victim also claimed that the crypto exchange failed to inform affected users of the rate of conversion used to complete this transaction.
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Fraud Investigation of Crypto Exchange JPEX Triggers Trading Halt, Arrests, Increased Regulatory Scrutiny
A fraud investigation of cryptocurrency exchange JPEX in Hong Kong has led to the shutdown of some trading activities on the platform, the arrest of multiple people, and increased regulatory scrutiny of the entire crypto sector. “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 stressed.
Crypto Exchange JPEX’s Troubles Continue
Cryptocurrency exchange JPEX announced Monday that it has suspended some trading activities on its platform. This decision comes as the Hong Kong police persist in their investigation of the exchange. The announcement explains that users will be unable to create new orders through the platform’s Earn Trading interface. The exchange claimed that it was “negotiating with … third-party market makers to resolve the liquidity shortage.”
On Tuesday, Hong Kong Chief Executive John Lee said at a news conference:
This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed.
Lee emphasized that the Hong Kong Securities and Futures Commission (SFC) “will monitor the situation very closely and ensure that investors are sufficiently protected.” He further noted that the government will step up education to ensure that investors have a better understanding of the risks involved in crypto trading and the regulatory framework governing crypto trading platforms.
Elizabeth Wong, head of the SFC’s fintech unit, said the regulator was investigating whether JPEX had violated the anti-money laundering ordinance, and it had referred the case to the police. The report triggered an investigation by the Commercial Crime Bureau.
The SFC subsequently issued a warning to investors to exercise caution when dealing with JPEX, emphasizing that the exchange had not submitted any license applications. The regulator further alleged that JPEX was making false claims about having obtained authorizations from overseas regulators.
Moreover, the financial regulator emphasized that the trading platform had promoted products with returns on savings that were “too good to be true” and many investors relied on misleading statements from social media influencers who were paid promoters.
According to the Associated Press, the police said Tuesday that they have frozen bank accounts worth 15 million Hong Kong dollars (.9 million) and seized three properties valued at 44 million Hong Kong dollars (.6 million) related to the exchange. They also revealed that they had received 1,641 complaints about JPEX involving .2 billion Hong Kong dollars (3 million.)
What do you think about the troubles at cryptocurrency exchange JPEX? Let us know in the comments section below.