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Hong Kong police have arrested 72 people in connection with the JPEX scandal, which marked the city's biggest case of financial fraud.
At least 2,305 victims were swindled by the Hong Kong exchange, netting a loss of HK$1.6 billion. JPEX promoted itself through widespread advertising and influencers as a licensed crypto exchange with yields of 20%.
In September 2023, JPEX suddenly suspended its services and announced that it was under investigation by the Hong Kong police for suspected money laundering and fraud. The platform’s website and social media accounts were taken down, and its customer service hotline was disconnected.
Police Commissioner Raymond Siu Chak-yee said on Thursday that Hong Kong police have frozen HK$228 million (US$29.37 million) in assets so far amid arrests.
Anndy Lian
“The force has received 2,636 reports with regard to the case as of today, and the amount involved is about HK$1.6 billion,” he said.
Those arrested include social media influers who appeared in the trading firm's adverts such as Chan Wing-yee, Joseph Lam Chok and Sheena Leung.
Hong Kong, which recently greenlit Bitcoin and Ethereum ETFs, has been subjected to cryptocurrency and investment scams since it announced a more liberal stance on regulation.
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The local police force recorded 6,330 investment scams last year, which saw HK$5.93 billion being lost. 2,342 cases were related to cryptocurrency, accounting for HK$3.16 billion.
Meanwhile, Hong Kong customs officers have made arrests in connection with a HK$1.8 billion money-laundering scheme involving a cryptocurrency platform and bank accounts of shell companies.
Three people were arrested in the bust: a 42 year old woman and two men, aged 48 and 60, who allegedly did not know each other. They were arrested for suspected conspiracy to deal with property known or reasonably believed to represent proceeds of an indictable offence, IE money laundering.
Two of the suspects handled 40% of the funds involved in the case, accounting for HK$760 million in Tether.
The woman, who served as a head of the operation, accepted transfers from different companies and crypto platforms, and then sent the funds to other companies and the two men involved through licenses money echangers. She handled HK$900 million of the funds.
The two male suspects held lower ranked positions, with the 60-year-old man dealing HK$300 and the other HK$600. Nonetheless, the three arrested are suspected to be core members of the operation.
Bank accounts linked to the companies had “abnormally frequent and large transactions” but no tax records or even a physical address. Customs cited one account which received HK$39 million a day and 167 transactions.
Sources of the funds included a crypto exchange platform and over 200 local and overseas companies. These funds went to the bank accounts of shell companies including mobile phone accessories and vehicle parts, before being transferred. The source and direction of funds are still under investigation.
Blockhead
All three suspects were released on bail but conviction of the offence carries a a maximum penalty of 14 years’ imprisonment and a HK$5 million fine.
“Investigating money laundering involving cryptocurrency presented us with challenges as it possesses a high degree of anonymity and it is not restricted by jurisdictions,” Florence Yeung Yee-tak, commander of customs’ financial investigation division, said on Thursday.
“We acted on intelligence, and conducted capital flow analysis and financial investigations.”
