Hong Kong to scrutinize cryptocurrency regulation after arrests linked to JPEX exchange

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HONG KONG (AP) — Hong Kong’s chief mentioned Tuesday that the territory will scrutinize the regulation of digital belongings after police arrested eight folks over allegations of fraud at an unlicensed cryptocurrency alternate that impacted greater than 1,600 buyers and over $150 million in belongings.

These arrested embody social media influencers who promoted the JPEX foreign money alternate and JPEX workers, police mentioned.

“This incident highlights the significance that when buyers need to put money into digital belongings, then they need to make investments on platforms which can be licensed,” Hong Kong chief govt John Lee mentioned at a daily information convention. “The SFC will monitor the state of affairs very intently and be certain that buyers are sufficiently protected.”

He mentioned the federal government will step up schooling so buyers will higher perceive the dangers concerned and the way platforms are regulated.

Police Senior Superintendent Kung Hing-fun mentioned the buyers have been largely inexperienced and had fallen for guarantees of excessive yields and low dangers.

Elizabeth Wong, head of the Securities and Futures Fee’s fintech unit, mentioned it was investigating whether or not JPEX had violated the anti-money laundering ordinance, and that it had referred the case to police and would help of their investigation.

The arrests of the eight adopted an announcement by the SFC final week that JPEX was unlicensed and didn’t have authority to function its cryptocurrency buying and selling platform within the metropolis. It mentioned some buyers had complained of being unable to withdraw their digital belongings from JPEX accounts or of discovering their balances have been “diminished and altered.”

JPEX introduced Monday that it was suspending buying and selling on its platform. It mentioned in an announcement that it was “negotiating with … third-party market makers to resolve the liquidity scarcity.”

On Sunday, JPEX complained of “unfair therapy by related establishments” in Hong Kong. It accused an unidentified third-party market maker of “maliciously” freezing funds.

Police mentioned Tuesday they’ve frozen financial institution accounts value 15 million Hong Kong {dollars} ($1 million) and seized three properties valued at 44 million Hong Kong {dollars} ($5.6 million). They mentioned that they had obtained 1,641 complaints about JPEX involving $1.2 billion Hong Kong {dollars} ($153 million.)

In mainland China, cryptocurrency transactions have been banned since 2021 and transactions made on overseas exchanges from throughout the mainland are additionally thought of unlawful. Within the wake of the ban, Chinese language cryptocurrency companies have turned to Hong Kong as a base.

Hong Kong’s SFC started accepting purposes for cryptocurrency exchanges from June 1, permitting licensed operators to serve retail buyers so long as they understood the dangers concerned. Beforehand, solely skilled buyers may entry such exchanges.

Solely two such exchanges have obtained approval in Hong Kong — OSL Alternate and Hashkey Alternate.



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