Hong Kong leader warns investors to only trade on regulated virtual asset platforms amid JPEX fallout, underscores need for controls
Investors should only trade on regulated virtual asset platforms, Hong Kong’s leader has warned amid the fallout over embattled cryptocurrency exchange JPEX as he underscored the importance of controls.
Chief Executive John Lee Ka-chiu on Tuesday said watchdog the Securities and Futures Commission (SFC) and police were set to hold a press briefing later in the day after receiving more than 1,400 complaints alleging fraud against JPEX. Six people have been arrested over the case.
Among those detained are YouTuber Chan Wing-yee and social media influencer Joseph Lam Chok, both of whom have set up cash-for-crypto shops in Hong Kong. The force has also targeted other over-the-counter cryptocurrency changers, including Coingaroo.
“This incident highlights the [important point] that when investors want to invest in virtual assets, then they must invest on platforms that are licensed, that are regulated by the SFC … This is the only way to ensure their investments are protected,” Lee told the media before his weekly meeting with key decision-making body the Executive Council.
In developing the virtual assets market in Hong Kong, Lee said the government would ensure there was effective regulation and transparency in the release of information.
But he also acknowledged that many trading platforms were located outside Hong Kong or established before the city’s ring-fenced regulatory framework came into force on June 1, after a lengthy consultation that sought to turn the city into a hub for virtual assets and Web3 activities.
Lee said authorities would conduct “more public education for investors” on the operation modes of virtual asset platforms and how the regulatory regime would ensure sufficient protection for users.
JPEX, which claimed to operate offices and units in Dubai, Australia and the United States, was first placed on SFC’s alert list in July last year, months after an extensive advertising campaign by the firm in the city’s busiest MTR stations as well as on billboards outside harbour-crossing tunnels.
The securities regulator issued a warning against JPEX last Wednesday for “misleading investors” while continuing to operate without applying for a licence.
SFC in particular singled out influencers and cash-for-crypto changers in its warning against active promotion of JPEX products and services, some of whom the watchdog said had made “false or misleading statements” to suggest JPEX had applied for a trading licence for cryptocurrency deals.
The platform halted all cryptocurrency transactions from Monday. Some users of the exchange had already reported issues such as high processing fees when withdrawing virtual assets from their online accounts in the days after the regulator sounded the warning.
Additional reporting by Harvey Kong
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