Hong Kong plans to flag suspicious crypto platforms amid JPEX scandal

The Securities and Futures Commission (SFC) of Hong Kong is intensifying the fight against unregulated cryptocurrency platforms in its region amid the JPEX crypto exchange scandal.

In a statement, the regulator notes that it is planning to provide a list of all virtual asset trading platforms (VATPs) that are licensed, considered licensed, closed, or pending applications. This is how the SFC wants to help clients identify potentially unregulated crypto platforms that operate in Hong Kong.

Moreover, the Commission intends to maintain a special list of “suspicious VATPs” and will make it publicly available on its website.

JPEX scandal leads to new game rules

The new rules were announced by the SFC shortly after the JPEX cryptocurrency exchange scandal began. Local media are describing the case as one of the worst examples of financial fraud ever seen in Hong Kong.

The SFC stated that cryptocurrency influencers and the trading platform made false or misleading statements on social media, suggesting that JPEX had applied for a VATP license in the region.

The regulator found out that JPEX has not applied for a license to operate in Hong Kong despite its claim to be a “licensed and recognized platform for facilitating trading of digital assets and virtual currency.”

$178 million in losses

On Sept. 17, JPEX suspended some operations and increased withdrawal fees amid the liquidity crisis. The platform said that its third-party market makers maliciously froze funds. The next day, JPEX users were unable to place new orders for Earn products.

According to the latest data, financial losses from JPEX amounted to $178 million. Local police received more than 2,200 complaints from exchange users.

A total of 11 people were taken into custody for questioning. The Hong Kong police also arrested crypto blogger Joseph Lam for advertising JPEX and raided his office, seizing boxes of evidence, including several banknotes.