From celebrity endorsement of online celebrities and new investment methods with advertisements all over the street, to scam platforms that can run away at any time, the "thunder" of virtual investment trading platform JPEX has shaken the Hong Kong investment community. According to the latest data released by the Hong Kong police, more than 2,300 victims have reported for help, involving more than HK$1.4 billion, and 11 people involved have been arrested on suspicion of conspiracy to defraud. Some Hong Kong media called it "the first criminal case in the currency circle" in Hong Kong.
Nandu and N video reporters combed and found that despite the exaggerated and inaccurate publicity methods and loopholes, JEPX has successfully attracted a large number of investors to pour high amounts of money in just two years, and the direct losses of many "bitter owners" are as high as hundreds of thousands of Hong Kong dollars, which shows the popularity of virtual asset investment in Hong Kong. Industry insiders pointed out that there are currently about 100 virtual asset trading platforms operating in Hong Kong.
Behind the turmoil, Hong Kong, as an international financial centre, has also become the focus of attention on how to continue to develop the virtual asset industry while improving the relevant regulatory system as soon as possible to protect the rights and interests of investors to the greatest extent.
JPEX's outdoor advertising is found in major neighborhoods in Hong Kong.
Immediately after being named, people went to empty buildings
The trigger for the "lightning explosion" incident stemmed from a statement issued by the Hong Kong Securities and Futures Commission on September 13. It pointed out that none of JPEX's physical stores were licensed by the SFC, and had not applied to the SFC for a licence to operate virtual asset platforms in Hong Kong, and pointed out that there were doubts in the promotion of JPEX and the operation of related money changers.
After being named to operate unlicensed, JPEX users soon discovered the problem. On the 14th, some netizens sent out screenshots of the operation pointing out that the handling fee for withdrawing 1,000 Tether (USDT) on the JPEX platform was as high as 999 USDT, and the actual arrival was only 1 USDT. At the same time, more netizens have successively revealed that the "Asian Blockchain" building rented by the company has been empty after the incident, and the JPEX exhibition booth at Asia's largest cryptocurrency conference "Token2049" held in Singapore is also suspected of being abandoned.
JPEX sets high fees to prevent users from withdrawing money in disguise.
On September 17, JPEX posted a document claiming that funds were locked by a third party, announcing that it would "remove all transactions from the wealth management page" from the early morning of the 18th. Since then, users have not been able to place any new banking orders, and the withdrawal of funds has become unknown.
Nandu reporters learned from the press conference of the Hong Kong Securities and Futures Commission that due to the huge public interest involved in the incident, the Hong Kong Securities and Futures Regulatory Commission will refer the case to the Hong Kong police, and the Commercial Crime Bureau of the Police will conduct multi-faceted investigations overnight, and immediately set up a hotline to appeal to deceived persons to report the case as soon as possible through the hotline and the electronic report center. In the days that followed, there was an influx of calls to report the crime. According to data released by the Hong Kong police, as of 17:00 on September 21, the number of victims reported for help had increased to 2,197, and the amount involved reached HK$1.37 billion.
At the same time, the police took action for several days, and since September 18, they have searched a number of money changers and arrested 11 people involved in the case on suspicion of conspiracy to defraud, including Hong Kong Internet celebrities Lin Zuo, Chen Yi, "Zhu Gongzi" and many other familiar faces of Hong Kong people, such as Hong Kong Internet celebrities who opened money changers to help JPEX promote and operate in Hong Kong. Hong Kong star Cheung Chi-lin and Hong Kong artist Chuang Simin, who have filmed or promoted JPEX, have also gone to the police station to assist in the investigation.
On September 20, the Nandu reporter noticed that JPEX issued a document admitting that telecommunications service providers in Hong Kong blocked their mobile apps and official websites at the request of the Hong Kong Securities and Futures Commission.
Even so, JPEX did not give up its struggle, and launched the "DAO Stakeholder Dividend Program" on the evening of the same day, saying that it would distribute 49% of the "DAO Stakeholder Dividend" and exchange it for a total value of 400 million USDT within two years. Some insiders pointed out that on the one hand, JPEX's move can set user funds for at least 1 to 2 years, and at the same time, it can also blur the identity of the victim as a "platform partner" in disguise, and misinterpret the lost funds as "investment failure", making it more difficult for users to recover losses. More comments pointed out that this is JPEX cutting the last wave of "leeks".
Although JPEX has always stated that "no matter what happens, it will continue to operate." On the 22nd, it was reported that JPEX's company registered in Australia was applying for voluntary deregistration. This makes users even more worried about whether JPEX is ready to "roll up and run away".
The propaganda is misleading
According to Hong Kong legislator Ng Kit Chuang, JPEX's "suffering master" group now exceeds 8,000 people, and among the more than 30 victims he has contacted, some have lost 6 figures or even 7 figures.
In just two years, almost everyone in Hong Kong knows the origin of JPEX, which attracted a large number of investors to pour out large sums of money.
Nandu reporters checked JPEX's official website and found that the company claims to be founded in 2020, is "a global digital asset crypto trading platform", provides a variety of virtual currency trading services, currently "operating headquarters" in Dubai, and claims to have legal financial licenses in the United States, Canada and Australia. However, as confirmed by the SFC, JPEX is not listed on the public list of licensed virtual asset service providers issued by the Dubai Virtual Assets Authority.
After entering the Hong Kong market, JPEX's outdoor advertising quickly occupied the most prosperous major neighborhoods. JPEX's large print advertisements can be seen on the facades of buildings, public transportation facilities, and large billboards. JPEX has also attracted a number of local influencers to join the company, set up money changers, and used its influence and persona as an "investment leader" to publicize and create popularity, thereby attracting more investors to enter the market.
However, after preliminary investigation, the Commercial Crime Bureau of the Hong Kong Police pointed out that JPEX's propaganda was highly misleading. Its advertisement of "low risk, high return" is an exaggerated and misrepresented propaganda technique, claiming to have co-operation with Hong Kong listed companies, but in fact the relevant co-operation has long been terminated, and it has made false statements as to whether it holds a license.
Hong Kong star Cheung Chi Lin once shot an advertisement for JPEX.
Hong Kong star Cheung Zhilin, who was invited to serve as JPEX's "Hong Kong brand ambassador", said in a recent response that when Zhang Zhilin was invited to shoot advertising films and print photos for JPEX through an advertising agency in March 2022, the platform claimed to have registered overseas.
After learning that JPEX was listed as an unlicensed company by the Hong Kong Securities and Futures Commission, Cheung terminated the cooperation agreement in September of that year and notified JPEX in writing that the other party was not allowed to use Cheung's portrait for any advertising before being licensed by the HKSAR Government.
According to some victims, after purchasing the transaction currency, JPEX will lobby users to deposit the transaction currency on the JPEX platform, promising to obtain extremely high but unreasonable returns, and will also require users to leave the private key of the cryptocurrency to the platform for safekeeping. As a result, JPEX basically controls all users' assets.
In addition, JPEX developed its own cryptocurrency JPC. The Nandu reporter learned from the Hong Kong police that JPC is different from other mainstream trading currencies and cannot be traded on other virtual asset trading platforms. The head of the Police Commercial Crime Bureau bluntly said, "This cryptocurrency is extremely liquid and is not worth much at all." ”
One step late for the regulatory regime?
The Nandu reporter combed and found that JPEX's "thunder" has already appeared in various clues.
In previous publicity, JPEX was found to have constantly "touched" international mainstream financial institutions, but it was repeatedly exposed. The advertisement of "Japanese cryptocurrency exchange" is believed to be deliberately confusing and trying to be linked to the Japanese exchange group JPX. To this end, JPX also issued a special article clarifying that it has nothing to do with JPEX. In March 2022, JPEX also announced its intention to launch a joint credit card, and soon after the international credit card company Visa publicly denied any cooperation with JPEX.
On September 18, Hong Kong Legislative Council member Ng Kit Chong (center) and JPEX "Bitter Lord" (first and second from right) held a press conference to introduce the situation.
The Hong Kong Securities and Futures Commission also said that as early as July 2022, JPEX was listed as an unlicensed company and suspicious website. In the following year, the SFC repeatedly reminded investors to be wary of the risks of unlicensed and overseas trading platforms through the Investor and Financial Education Committee and the SFC's own information release platform, but did not directly name JPEX.
In fact, 2022 is the year that the HKSAR government focuses on promoting the development of the virtual asset industry. On 31 October of that year, the Financial Services and the Treasury Bureau of Hong Kong issued the Policy Declaration on the Development of Virtual Assets in Hong Kong. It clearly states that Hong Kong is an international financial centre and that the HKSAR Government has an open and inclusive attitude towards global innovators engaged in virtual asset business.
In October 2022, Hong Kong's Financial Secretary, Paul Chan, announced that the HKSAR Government would issue a policy declaration on virtual assets.
At the same time, the improvement of supervision in related fields has also been put on the agenda. According to the Declaration, the HKSAR Government and regulators are stepping up preparations for the establishment of a new licensing regime for VIS (VAS) under which VA exchanges will be subject to the same anti-money laundering and counter-terrorist financing and investor protection requirements as traditional financial institutions.
The Anti-Money Laundering Ordinance passed by the Hong Kong Legislative Council in December 2022 brought virtual asset trading platforms under the SFC's regulatory scope, ending the history of voluntary supervision of relevant platforms. In May 2023, on the eve of the official commencement of the new licensing regime, the SFC clearly informed the industry that if it had no intention of applying for a licence, it should cease business in an orderly manner during the transitional period and stop promoting its services to Hong Kong investors.
However, regulation came one step too late. Nandu reporters learned that many JPEX investors have entered the market in 2021. After the new regulations came into effect, instead of applying for a license, JPEX intensified its marketing, which attracted the attention of the Securities Regulatory Commission and eventually involved Hong Kong's "first criminal case in the currency circle".
Some insiders pointed out that there are currently about 100 virtual asset trading platforms operating in Hong Kong. Next, how to effectively supervise the relevant platforms to protect the rights and interests of investors has become the focus of attention.
In this regard, the Chief Executive of the Hong Kong Special Administrative Region (HKSAR) Mr John Lee pointed out that information will be kept open and transparent, and investor education will be attached importance to and promoted to ensure that the public fully grasps the risks and operations involved in virtual assets. On September 25, the Hong Kong Securities and Futures Commission also held a press conference to say that for Hong Kong's virtual asset trading platforms, it will publish a list of licensed platforms, closed platforms, licensed platforms and newly added applicants online, and will also publish a list specifically targeting suspicious virtual asset trading platforms to help the public be vigilant.
Produced by: Nandu Instant
Written by: Nandu reporter Weng Anqi Intern Li Xiaoyi He Yintao