JPEX Exchange Promotion Costs Arrest of Hong Kong Influencer
The arrest of John Lam came after the suspension of trading on JPEX, a crypto exchange. Regulators assert it was operating without a permit.
On Monday, Joseph Lam Chok, a social media influencer, was apprehended after the discontinuation of trading on JPEX, a crypto exchange. Lam is a trained attorney turned insurance broker who enjoys a significant following on Instagram.
According to a report, he was one of the six persons arrested by Hong Kong police in connection with the exchange. His apprehension is linked to promoting the Dubai-founded exchange, which officials assert has been running without a permit. Local news reports revealed that a laptop and cash were among the evidence seized by officers.
JPEX Discontinues Withdraws Alleging Frozen Funds by Third-party Market Maker
Before his apprehension, JPEX had discontinued withdraws. Via a statement, the crypto exchange had claimed that its third-party market makers had spitefully frozen funds because of biased treatment by pertinent institutions in Hong Kong and a sequence of damaging news.
Law enforcers had received more than 80 grievances from the exchange’s users, disclosing they had been prevented from withdrawing assets worth HK$34M ($4.3M) stored on the platform. A news post showed over 1,000 complaints had been received, with up to $12M being frozen.
Before his arrest, Lam had visited law enforcers on September 15 to explain his link to JPEX and aid in retrieving funds. He refuted the assertions that he partnered with the exchange and was behind its promotion to his followers.
The move by Hong Kong regulators aligns with the administrative region pursuit of weeding out non-compliant operations that hinder its objective of becoming a regional and global crypto hub.
Enforcement Officers Discover Suspicious Features in JPEX
Lam’s arrest comes days after the issuance of a statement by the Hong Kong regulator claiming that the ‘unauthorized’ crypto exchange had actively used social media influencers to promote its services and products to people. Further, the regulator warned people to be cautious of opportunities that appeared ‘suspicious’ and had directly accused JPEX of owning ‘wary features.’
On Sunday, the crypto exchange promised to ‘slowly alter the withdrawal fees back to ordinary levels.’ It added that a dedicated withdrawal team would be available to address emergency withdrawal requests.
Lam’s arrest comes amid the push by Hong Kong regulators to crack down on scams and frauds linked to cryptocurrency. In the first four months of this year, citizens lost $90M to investment schemes. Since July 2022, the securities regulator has named two JPEX-linked firms in its alert list, showing that this platform lacked proper permits to solicit Hong Kong investors.
Securities Commission Dispute JPEX Claims of Possessing Foreign Permits on Savings Product
The Commission claimed JPEX had also incorrectly asserted that it had acquired permits from foreign authorities and provided significant yields on savings product. It claimed the crypto exchange banked on deceptive statements from social media influencers ‘who are mostly paid promoters.’
In June, the Securities and Futures Commission (SFC) introduced its VATP regulatory regime as part of the administrative region’s strategy to become a crypto. The regime compels exchanges dealing with retail clients to apply for and acquire permits within a year.
