From free ice cream to one of Hong Kong's biggest ever financial frauds: what and who is behind the mysterious JPEX?

The sudden implosion of crypto exchange JPEX has grabbed headlines in Hong Kong, with authorities under pressure to unravel a mess that could turn out to be the city's largest ever financial fraud.

But after several days of intense media scrutiny, the company itself remains something of a mystery.

A search of company registries by the Post related to JPEX in Hong Kong turned up a firm by the name of Web3.0 Technical Support, formerly known as JPEX Technical Support.

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A visit on Wednesday to the listed address in Lai Chi Kok revealed that the location was a co-working space named Coffice. A staff member there told the Post they had been unaware of a company named JPEX using their premises, and that no JPEX-related entity was currently a client. Police had visited the premises a few days earlier, she added.

The mystery surrounding JPEX's office space adds to questions about the firm's management, structure and ability to conduct its suspicious activities in Hong Kong for so long.

While eight individuals connected to JPEX have already been arrested in the case, which involves over HK$1 billion in missing assets, some have simply been identified as JPEX promoters.

Web3.0 Technical Support's corporate secretary is an unemployed 22-year-old and its staff includes a waiter, while a 52-year-old security guard was listed as the representative of Australia-registered JP-EX Crypto Asset Platform Pty, according to a list of arrested persons reported by the Sin Tao newspaper.

A co-working space in Lai Chi Kok, where JPEX Technical Support Company is registered in Hong Kong, on September 20, 2023. Photo: Dylan Butts. alt=A co-working space in Lai Chi Kok, where JPEX Technical Support Company is registered in Hong Kong, on September 20, 2023. Photo: Dylan Butts.>

The exact roles of others charged and those connected to them in the JPEX case remains unclear, with the company having gone to great lengths to keep its key personnel anonymous.

The only information about its operational structure offered on its website is that JPEX did not have a CEO, but instead operated as an anonymous "decentralised autonomous organisation", described as a collective where every member contributed to operations and decisions.

Despite the secrecy cloaking JPEX's inner workings, according to information on its website, it has been operating out of Dubai since 2020 and had plans to expand in Hong Kong and serve local investors.

In a February press release, JPEX said it had spent more than HK$40 million on advertising in the city.

This included efforts to gain local brand ambassadors, such as Asian film and television superstar Julian Cheung Chi-lam, who was announced as JPEX's imminent "Hong Kong district brand ambassador" in October 2022.

Later that year, the company stepped up its marketing campaign "Fix the money fix the world" in which advertisements for the exchange were placed on Hong Kong's trams, tram stations and "over 100 taxis and bus stops".

These moves were made despite the platform falling foul of the Securities and Futures Commission (SFC) in July 2022, when the regulator issued an alert about two JPEX-connected entities urging investors "to be extremely careful if they plan to invest on unregulated platforms".

Police Officers remove boxes from the Entertainment Building in Central, with links to JPEX. Photo: SCMP/Jelly Tse alt=Police Officers remove boxes from the Entertainment Building in Central, with links to JPEX. Photo: SCMP/Jelly Tse>

In February 2023, JPEX announced plans to submit an application for Hong Kong's landmark virtual asset trading platform (VATP) licensing regime, which - starting in June - allowed cryptocurrency firms to apply for approval from the SFC to legally serve retail clients.

According to an SFC circular released on May 31, exchanges that already had a presence in the city and which met certain standards, were permitted a one-year grace period to continue operations while applying for a licence.

The SFC did not respond to a request for comment on the matter from the Post.

Regardless, following the policy change, the company announced that it was recruiting talent in Hong Kong and growing its team to meet the platform's development needs in the city.

Just a week earlier, it had celebrated the new VATP regime by offering free ice cream at a location in Mong Kok to Hongkongers that took a photo, and posted it on their Instagram story, tagging JPEX's official Instagram account.

Ice cream was not the only tactic employed by JPEX to appeal to investors. Between June 14 and July 6, it announced it was offering awards to new sign-ups in Hong Kong and Taiwan during a "limited-time new user registration event".

The awards included cryptocurrency tokens - worth about US$60 today - and entrance to a "lucky draw," with the opportunity to win one bitcoin (US$27,000).

Other initiatives taken by the company in Hong Kong included a partnership with a local animal shelter to provide "resources" through the "JPEX Charitable Foundation'".

However, the curtain came crashing down for JPEX on September 13 when the SFC issued a statement warning investors about the platform, stating JPEX had "suspicious features" and was promoting misleading information about its licensing.

JPEX asked investors to surrender the personal keys to their trading accounts, according to two users who testified during a press conference on Monday with disguised voices and identities.

Several days later, as authorities launched an investigation into JPEX, it suspended trading, and imposed an exorbitant fee that essentially prevented users from withdrawing their funds

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

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