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Hong Kong Police Announce 6 Arrests in JPEX Probe

Authorities in Hong Kong have arrested six people, including two social media influencers, in conjunction with a probe into crypto exchange JPEX, the South China Morning Post reports.

Hong Kong-based JPEX has been operating in the territory without a license, the Securities and Futures Commission, Hong Kong's market regulator says, and police have received over 1,408 complaints about the platform. Local media reports that the amount involved in the complaints totals $128 million.

“Recently, due to the unfair treatment by relevant institutions in Hong Kong towards JPEX, a cryptocurrency trading platform, and a series of negative news, our partnered third-party market makers have maliciously frozen funds,” the exchange said in a blog post early Monday Hong Kong time. “They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties.”

Amid these liquidity challenges, JPEX said it will delist all transactions on its Earn Trading interface as of Monday while ensuring ongoing orders and adjusting withdrawal fees. The exchange also said it is considering restructuring as a Decentralized Autonomous Organization (DAO).

The exchange also promised to continue operating and criticized the SFC for its actions.

"As an operator in the cryptocurrency industry and a promoter of the Web 3.0 concept, JPEX expresses extreme disappointment at the SFC’s unfair practices that disrupt market order," the exchange said in a post. "Not only does their attitude contradict the government’s policy development direction of making Hong Kong a Web 3.0 city, but their biased stance also does not fulfill their role as a fair and impartial regulator, let alone protect the multitude of investors in Hong Kong."

JPEX has been on the SFC's investor alert list since July 2022.

Local media in Taiwan report that JPEX’s Taipei office was recently vacated, and authorities have reportedly questioned Taiwanese influencers hired by the exchange.

On its website, JPEX says it is licensed by securities authorities in Australia and has registration with the U.S. Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB).

Attendees who visited JPEX’s booth during the recent Token2049 conference in Singapore reportedly found it abandoned after the first day.

JPEX's thinly traded exchange token, JPC, is down 21% during the last 24 hours.

UPDATE (Sept. 18, 2023, 13:10 UTC): Updates throughout.