In the aftermath of the unfolding JPEX scandal, the Hong Kong Securities and Futures Commission has announced its intention to compile a comprehensive public registry of crypto trading platforms suspected of engaging in illicit activities.
The Securities and Futures Commission (SFC), a prominent financial oversight body in Hong Kong, has undertaken a firm commitment to intensify its efforts in combatting unregulated cryptocurrency trading platforms operating within its jurisdiction. In a statement released on September 25th, the SFC disclosed its plan to unveil a comprehensive list encompassing all licensed, deemed licensed, closing down, and pending application virtual asset trading platforms (VATPs). The aim is to empower the general public to discern potentially unregulated VATPs operating in Hong Kong.
These new regulatory measures have been instituted in response to the ongoing JPEX cryptocurrency exchange scandal, which local media outlets are characterizing as one of the most egregious cases of financial misconduct to have ever afflicted the region. JPEX stands accused of marketing its services to Hong Kong residents without obtaining the requisite license to operate within the country.
During a press briefing held on September 25th to elucidate the new regulations and shed light on the JPEX scandal, Christopher “Kit” Wilson, the Director of Enforcement at the SFC, revealed that due to the evasive conduct of involved stakeholders and unsatisfactory responses to information requests, JPEX had been placed on the watchlist in July 2022.
Wilson explained that subsequently, the SFC initiated a multifaceted investigation involving various parties spanning multiple jurisdictions. This investigation reached a critical juncture in April 2023 following the receipt of the first official investor complaint.
“In June 2023, the Anti-Money Laundering Ordinance (AMLO) came into full effect, prompting enforcement to commence a more formal inquiry into the alleged fraud,” Wilson stated. “As a result of this investigation, we issued a formal warning on September 13th and referred the matter to the police.”
The financial repercussions stemming from the JPEX debacle are estimated to have surpassed $178 million at the time of this report, with local law enforcement agencies having received over 2,200 complaints from affected exchange users.
A total of 11 individuals, including prominent figures in the crypto community, YouTubers, and employees of the purportedly fraudulent cryptocurrency exchange, have been apprehended for questioning.
In an official statement, the SFC underscored that the fallout from the JPEX incident “underscores the perils of engaging with unregulated VATPs and underscores the imperative of robust regulation to sustain market confidence.” The regulatory body further pledged its commitment to collaborate with local law enforcement to establish a dedicated platform for citizens to report suspicious activities and potential legal infringements by VATPs. Additionally, they vowed to conduct a thorough investigation into the JPEX incident to ensure that the perpetrators are brought to justice.