The Taipei District Prosecutors Office has detained two individuals connected to the crypto exchange JPEX in relation to an investigation into potential fraud.
According to local reports, Chang Tung-Ying, the lead partner at the Taiwan branch of the embattled crypto exchange, and Shi Yu, an academic linked to JPEX, have been arrested on accusations of infringing upon banking and anti-money laundering legislation.
Prosecutors have instructed the local justice investigation bureau to conduct investigations at nine sites, leading to the questioning of four individuals. A suspect with the last name Liu was granted bail for NT$50,000 (equivalent to $1,550), while another, named Niu, was released following their interrogation.
The probe into JPEX’s activities began after reports emerged in June of the exchange promoting cryptocurrency products and seeking investments.
The investigation also draws in Nine Chen, a prominent Taiwanese singer who once represented JPEX as a regional brand ambassador. If his involvement is deemed substantial, he may be summoned as a defendant in a lawsuit.
The JPEX scandal is estimated to involve sums exceeding $213 million.
The extent of JPEX’s operations within Taiwan is yet to be fully determined, but the repercussions are becoming evident. Over ten individuals have already initiated legal action, claiming to have suffered losses due to the exchange’s practices.
Taiwanese regulations, enforced by the Financial Supervisory Commission since July 2021, mandate that virtual asset service providers adhere to anti-money laundering legislation. JPEX has not registered with the FSC to meet these AML requirements.
Hong Kong crackdown on JPEX operations
The situation for JPEX has been precarious beyond Taiwan’s borders as well. In September, Hong Kong authorities dismantled the exchange’s local operations, resulting in the arrest of at least 11 people connected to the alleged fraudulent activities.
The financial watchdog and police in Hong Kong also took measures to restrict access to JPEX’s mobile application and website.
“Since September 13, 2023, the SFC has suddenly made a series of accusations against our platform’s operating model and promotional methods, which we vehemently resent as they were made without investigation or review,” JPEX said at that time.