Hong Kong authorities have formally charged 16 individuals in a crypto fraud case valued at USD $205 million, marking it as the city’s largest financial fraud in history and a significant test for its virtual asset regulatory framework.
The accused face charges including conspiracy to commit fraud, fraudulent inducement of investments, and money laundering. The JPEX platform operated without a license, leaving thousands of investors unable to withdraw their funds.
This case is the first time Hong Kong authorities have applied the Anti-Money Laundering and Counter-Terrorist Financing Ordinance to a cryptocurrency-related matter, according to reports.
Among those formally accused are influencer and former lawyer Joseph Lam Chok, and José Chan, the former marketing director for JPEX. Chan is alleged to have orchestrated advertising campaigns that promised exorbitant returns, some as high as 100% on crypto investments. Other individuals charged include various influencers who promoted the platform on social media and several operational employees.
The scandal emerged in September 2023 when a large number of JPEX users reported being unable to access or withdraw their funds. Despite its unregulated status in Hong Kong, JPEX heavily promoted itself through extensive advertising, including large posters in public transport systems, and by engaging celebrities and influencers to project a false sense of security and credibility.
The platform presented itself as a crypto exchange offering trading and staking services. Following its collapse, JPEX’s native token, JPC, lost virtually all its value, leaving investors with illiquid assets.
Since the case opened in late 2023, authorities have received more than 2,500 complaints from victims and have made 80 arrests in connection with the fraud. Investigators have confiscated over USD $50 million in assets, including bank accounts, luxury vehicles, and various cryptocurrencies.
The pursuit of justice extends beyond Hong Kong, with Interpol reportedly assisting in the search for at least three additional key suspects believed to have played central roles in the scheme. An Interpol red notice, a request to locate and provisionally arrest individuals pending extradition, has been issued.
The 16 accused are scheduled to appear before Hong Kong’s Eastern Court on Thursday. This legal proceeding is widely viewed as a critical examination of Hong Kong’s virtual asset regulatory regime and serves as a strong warning regarding the necessity of due diligence in the cryptocurrency sector.