Hong Kong to list ‘suspicious’ crypto platforms in wake of JPEX scandal

fiverr
Ledger


One of Hong Kong’s principal financial regulators, the Securities and Futures Commission (SFC), has vowed to step up efforts to combat unregulated cryptocurrency trading platforms in its jurisdiction.

According to a Sept. 25 announcement, the SFC said it would publish a list of all licensed, deemed licensed, closing down, and application-pending virtual asset trading platforms (VATPs) to better help members of the public identify potentially unregulated VATPs doing business in Hong Kong.

The SFC said it will also keep a dedicated list of “suspicious VATPs,” which will be featured in an easily accessible and prominent part of the regulators’ website.

The new measures being introduced by the SFC to combat unregulated VATPs. Source: Hong Kong SFC

The new rules come immediately in the wake of the ongoing JPEX crypto exchange scandal, an affair that local media outlets are describing as one of the worst cases of financial fraud to ever hit the region. JPEX stands accused of promoting its services to Hong Kong residents despite not having applied for a license in the country.

bybit

Speaking at a Sept. 25 press briefing on the new rules and the JPEX scandal, Christopher “Kit” Wilson, director of enforcement at the SFC, explained that due to “evasive” behavior from stakeholders and unsatisfactory responses to requests for information, JPEX was placed on the alert list in July 2022.

Wilson shared that the SFC then launched a complex investigation involving multiple parties across a range of jurisdictions, which escalated in April 2023 after the organization received its first official investor complaint.

“In June 2023, an AMLO (Anti-Money Laundering Ordinance) came into full effect. At that time enforcement commenced a more formal fraud investigation. As a result of that investigation we issued a formal warning on Sept. 13 and referred the matter to the police.”

The financial fallout from JPEX is estimated to have reached around $178 million at the time of publication, with local police having received more than 2,200 complaints from affected users of the exchange.

A total of 11 people, including crypto influencers, YouTubers and employees of the allegedly fraudulent crypto exchange, have been taken into custody for questioning.

Related: Troubled crypto exchange JPEX applies for deregistration in Australia

In a statement, the SFC said the resulting fallout from JPEX “highlights the risks of dealing with unregulated VATPs and the need for proper regulation to maintain market confidence.”

The regulators added that they would be working with local police to establish a dedicated channel for citizens to share information on suspicious activity and potential legal breaches by VATPs, as well as better investigating the JPEX incident to help “bring the wrong-doers to justice.”

Deposit risk: What do crypto exchanges really do with your money?