Hong Kong authorities charge more than a dozen in $206M JPEX crypto fraud

Hong Kong authorities have charged 16 people in connection with the JPEX crypto scandal, which reportedly defrauded investors of $205.8 million. According to the police, this is the biggest case of suspected financial fraud in Hong Kong’s history. 

Chief Superintendent Ernest Wong Chun-yue of the commercial crime bureau has stated that Interpol was hunting for two masterminds and a core member of JPEX. That followed local police laying charges against six core members, seven influencers, and individuals involved in over-the-counter (OTC) operations, and three fake account holders.

The suspects have been charged with conspiracy to defraud, fraudulently inducing investment, and money laundering. One of them is Joseph Lam, a former lawyer and social media influencer.

Interpol issues red notices for three fugitives believed to be key players

To date, 80 individuals, including 14 key members of a criminal syndicate, have been arrested, with a total of HK$228 million seized, since the investigation began in September 2023. The arrests followed an announcement by the SFC that JPEX was unlicensed and lacked the authority to operate its crypto trading platform in the city. 

SFC said some investors had complained of being unable to withdraw their virtual assets from JPEX accounts or of finding their balances were reduced and altered. At the same time, JPEX announced that it was suspending trading on its platform. It said in a statement that it was “negotiating with … third-party market makers to resolve the liquidity shortage.”

Later on, JPEX complained of “unfair treatment by relevant institutions” in Hong Kong. It accused an unidentified third-party market maker of “maliciously” freezing funds. As a result, the police froze their bank accounts worth $1 million and seized three properties valued at $5.6 million. 

So far, more than 2,700 people have fallen victim to the alleged scam. Wong said the investigation was “highly difficult and complex” because of the number of victims and the massive amount of data, including bank, crypto transaction records and digital forensics.

“During an investigation, police need time to handle exhibits and evidence. We need to unravel the whole affair and look for useful information,” he said.

The 16 accused are scheduled to appear in Eastern Court on Thursday.  Meanwhile, authorities have said that Interpol issued red notices for three fugitives, Mok Tsun-ting, Cheung Chon-cheong, and Kwok Ho-lun, who are believed to have played central roles in the scheme.

A red notice is a request to locate and provisionally arrest a person pending extradition.

Hong Kong authorities freeze millions linked to Prince Group

In other news, Police in Hong Kong and Taiwan have frozen $354 million worth of assets linked to Cambodia’s Prince Group. According to reports, the assets frozen are believed to be the proceeds of crime. The assets include cash, stocks, and funds. The report says that no one has been caught.

Previously, authorities in the US and UK accused Chen and his network of running scam centers with forced labor and of moving billions of dollars in stolen money all over the world. The US charged Chen and seized $15 billion in Bitcoin from him. 

The US revealed that its group, which had assets in London, Hong Kong, Singapore, and Taiwan, had operated undetected for more than a decade. The US Treasury Department put sanctions on 146 groups and people in the network, including Chen.

Even after ongoing efforts to catch crypto criminals, Hong Kong authorities have proposed more lenient capital requirements for financial institutions holding certain crypto assets. As reported by Cryptopolitan, crypto coins built on permissionless blockchain networks could qualify for lower bank capital requirements if their issuer implements functional risk management and mitigation measures.

The smartest crypto minds already read our newsletter. Want in? Join them.