On September 18th, due to unlicensed operation, Hong Kong virtual asset platform JPEX announced that it would take down all transactions on its finance page from the 18th.
According to the South +, the Hong Kong police Commercial Crime Bureau on the 18th on suspicion of “conspiracy to defraud” arrested six people. As of the 18th, the police have received more than 1400 cases reported, involving about one billion Hong Kong dollars.
The Hong Kong Securities and Futures Commission recently pointed out that none of the entities under the JPEX Group had been licensed by the SFC, and did not apply to the SFC for a license to operate a virtual asset trading platform in Hong Kong, and pointed out that the platform’s promotional practices, there are many suspicious, may be suspected of violating the law. Subsequently, the Hong Kong police also intervened in the investigation and carried out a series of actions.
On the morning of the 18th, the Commercial Crime Bureau of the Hong Kong Police arrested Hong Kong netizen Lin Zuo, who had claimed to have applied to become a partner of JPEX, in Central. The police searched Lam’s office and took away several boxes of evidence, including a batch of cash.
At 4:00 p.m. on September 19, the SFC and the Hong Kong police held a press conference to disclose details of the JPEX case, a virtual asset trading platform that has attracted attention from the outside world, to the media and the public.
So far, regarding the JPEX case, the Hong Kong police have received reports from 1,641 people, involving HK$1.2 billion, and have arrested eight people involved in the case.
Lee Ka-chiu speaks out
The Chief Executive of the Hong Kong SAR, Mr. Lee Ka-chiu, said on the 19th that he was very concerned about the JPEX case, and that the interests of investors should be fully protected, and asked the SFC and the police to hold a press conference this afternoon to introduce the situation.
On the development of virtual assets, Li Jiachao said, the SAR Government’s policy is, first, the need for effective regulatory system to protect investors, second; information distribution needs to be open and transparent; third, the importance of and to promote investor education to ensure that the public fully grasp the risks of the assets and the operation of the situation.
Li Jiachao also said that the JPEX incident reflects the importance of regulation, the importance of investing in a regulated, licensed trading platform, and the importance of personal awareness of virtual assets and risks. The SFC will monitor changes and developments in the market to ensure that investors’ interests are fully protected. The SAR Government will also vigorously promote investor education.
Celebrities were once invited to endorse their advertisements
Now have “cut the seat”
On September 13, the SFC issued an alert stating that it was aware that a virtual asset trading platform called “JPEX” was actively promoting its services and products to the Hong Kong public through social media celebrities and over-the-counter (OTC) virtual asset currency exchangers.
Last year, JPEX sold advertisements on TV, outdoor advertisement spots and light boxes at bus stops, and announced that Chilam Cheung would be its brand ambassador.
Recently, Chilam’s manager told the media on behalf of the public relations company that JPEX had already informed JPEX that it could not use Chilam’s portrait to promote its products without obtaining a license in Hong Kong, and that it would reserve the right to pursue JPEX, and that the advertisement had been taken down online.
Screenshot of the previous advertisement
Artist Chuang Si Min was also accused of making a movie introducing JPEX in mid-July, and also said that she could receive up to 16% return, and the movie has now been put away. When attending an event, she said she was one of the victims and revealed that she had lost a 6-digit investment. She knew that the police and the Securities and Futures Commission had intervened in the incident and were investigating, and was waiting for news at this stage.
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Cindy Chong has filmed herself saying that she would deposit money in JPEX to earn a high interest rate.
Another spokesperson, Chen Zhenjiu, said on social media that he had ended his endorsement at the end of July and was trying to understand the situation, but he still could not contact the relevant people at JPEX, “Other details are being dealt with by the company, and the relevant units are willing to cooperate fully with the relevant units if there is a need for investigation”, and asked JPEX to take down all promotional materials as soon as possible.
Screenshots of previous advertisements
The 34-year-old netizen and actor Lin Zuo publicly said in July this year that he had applied to become a partner of JPEX. However, after JPEX was named by the Hong Kong Securities and Futures Commission, Linzuo quickly cleared his name and claimed that he had also lost a lot of money. He also said that “he, like Chilam Cheung, Chong Sze Man, Chung Pui Sang and other celebrities, had helped promote the platform as a spokesperson and agent, but was by no means a behind-the-scenes participant”. However, he is now suddenly arrested by the Commercial Crime Bureau.
According to the information, Lin Zuo has become a hot topic with his luxurious lifestyle and many scandals. He is not only a well-known online businessman, but also a highly controversial figure who has been called a modern-day “Wei Xiaobao”.
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All transactions on the finance page have been taken down
Since September 13, the Hong Kong Securities and Futures Commission issued the aforementioned warning, the southern financial media reporter noted that JPEX released a number of “special announcements” on its official website to respond to external questions.
JPEX in the 18th release of the latest announcement explains that, due to a series of negative news in the outside world for several days, resulting in the platform cooperated with the third-party market maker maliciously lock funds, limiting the platform’s liquidity, greatly increasing the platform’s daily operating costs, resulting in operational difficulties.
On September 17, JPEX announced on its official website that it “will take down all transactions on the wealth management page from September 18, at which time users will not be able to make any new wealth management orders, while old ongoing wealth management orders will be maintained until the end date of the product in order to receive the proceeds.” Additionally, JPEX revealed that it is “in the process of approaching relevant third-party market makers to resolve the liquidity shortfall at the earliest opportunity.”
Notably, JPEX claimed that in order to protect the rights of its users, it wrote to the SFC again on September 15 to ask for guidance, and JPEX said that the SFC only responded with the following in its reply: “The SFC has referred JPEX’s case to the police and will assist them in their investigation.” (“The SFC has referred JPEX’s case to the Police and will assist the Police in their investigations.”)
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JPEX says the Hong Kong SFC responded to the request for guidelines in this way.
According to its official website, JPEX describes itself as “a licensed and recognized digital asset and virtual currency platform, aiming to provide a safe and reliable international platform for buying and selling cryptocurrencies safely and conveniently in different places.”
In fact, as early as July 2022, JPEX was included in the “Other” category of the “List of Unlicensed Companies and Suspicious Websites” that is regularly updated on the official website of the Hong Kong Securities and Futures Commission (SFC). According to the SFC, the company “appeared” to be offering virtual asset-related products to Hong Kong investors on its website, and called on investors to exercise extreme caution when investing on unregulated platforms.
This incident is also the first time that Hong Kong has taken action against an unlicensed virtual asset platform since the announcement of the implementation of the virtual asset licensing regime.
In June this year, Hong Kong announced the formal implementation of a mandatory licensing regime for virtual assets, and platform operators who are providing or intend to provide virtual asset trading-related services in Hong Kong must apply for a license from the Hong Kong Securities and Futures Commission.
Southern financial media reporter inquired about the Hong Kong SFC website found that as of August 3, only two virtual asset trading platforms were officially licensed by the Hong Kong SFC, respectively, “OSL Digital Securities Limited” and “Hash Blockchain Limited Hash Blockchain Limited”.
Three companies have cooperated with the company and then stopped at once.
Southern financial media reporter noted that the three Hong Kong listed companies were released in 2021, 2022, 2023, announcing that they had plans to cooperate with the company that belongs to the JPEX platform, but then they have announced the cessation of cooperation. One of the fastest, just about a month after the call to stop.
On September 13, after the Hong Kong Securities and Futures Commission (SFC) issued the aforementioned warning, Co-operative Communications Group Limited (01613.HK, hereinafter referred to as “Co-operative Communications”) issued a voluntary announcement on the Hong Kong Stock Exchange, saying that it noticed the warning issued by the SFC on the JPEX platform, and said that the company had not participated in the operation of the JPEX platform in any way.
On September 13, Synergy Communications issued an announcement to clarify its relationship with the JPEX platform.
On June 13 this year, Synergy Communications said in another voluntary announcement that in light of the significant increase in virtual asset-related activities in recent years, the company decided to seize the opportunity to enter into a joint venture to operate a virtual asset trading platform.
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On June 13, Synergy Communications announced that it would engage in virtual asset-related activities.
Synergy Communications announced that Radio World Holding Limited, a direct wholly-owned subsidiary of the company, entered into a subscription and shareholders’ agreement with JPEX Holdings Limited and Phoenix International Group Holdings Limited, which are associated with the JPEX platform, on June 13 to jointly operate the joint venture Jade Power Lab Technology Group Limited (“Jade Power”), in which the three companies hold 51%, 25% and 24% of the shares respectively.
Among them, JPEX will be to Jade Power to provide technical services, in order to settle all the subscription money. Jade Power initial only business is to provide virtual asset trading services in Hong Kong, and has been operating in Hong Kong since May 2023, said “to apply to the Hong Kong Securities and Futures Commission for a license to operate”.
On September 13th, Synergy Communications announced that the agreement had lapsed on June 30th due to the fact that certain conditions precedent to the completion of the agreement had not been completed by June 30th or such other date as may be agreed upon by each of the other parties, implying that the said cooperation had come to an end.
In March 2022, another Hong Kong-listed company, China Skybow Holdings Limited (00428.HK, hereinafter referred to as “China Skybow Holdings”) announced that it had entered into a non-legally binding Memorandum of Understanding (“MOU”) with JPEX, under which JPEX would seek to utilize its AI software trading and arbitrage trading technology to apply to securities trading and other forms of transactions, with the parties aiming to explore investments of up to US$10 million in different areas related to blockchain technology, including, but not limited to, non-homogeneous tokens, marketplace platforms, decentralized autonomous organizations and others.
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On March 21, 2022, China Skybow Holdings announced a Memorandum of Understanding (MOU) for a partnership with JPEX.
However, only about a month later, China Skybow Holdings announced that “this is not the best time to carry out the Proposed Cooperation at this stage. Therefore, the Board of Directors has decided to stop proceeding with the Proposed Cooperation.”
For its part, hmvod video Ltd (08103.HK) announced in May 2022 that it had previously sought to collaborate with a company owned by JPEX in order to provide it with software and systems such as DAPP Wallet and IAIA for processing cryptocurrencies and non-homogenized tokens (NFTs). However, after further consideration, the company decided that it did not need the aforementioned software and systems at this stage, and decided to cancel the memorandum of understanding that it had signed with JPEX in September 2021 to cooperate with the company.
In September 2021, hmvod video Ltd. announced the cessation of its MOU with JPEX.
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Hong Kong’s financial regulators prompted one after another
Recently, two financial regulators, the Hong Kong Monetary Authority (HKMA) and the Hong Kong Securities and Futures Commission (SFC), have issued a series of alerts for investors, reminding them of the misleading statements made by some virtual asset organizations.
Self-proclaimed “bank” “to provide banking services” or suspected of violating the law
On September 15, the Hong Kong Monetary Authority (HKMA) issued a reminder on its official website that it has recently noticed that some virtual asset institutions calling themselves “crypto banks”, “virtual asset banks”, “digital asset banks “, “digital banks” or “digital transaction banks”, etc., or claim to provide “banking services” or “bank accounts”. account”. Some VAs also use the term “deposit” to describe the funds deposited with them by their clients, or advertise “savings schemes” as “low risk” and “high return”. “high return”.
According to the HKMA, these descriptions are misleading.
The HKMA reminds members of the public that non-Hong Kong banks are not regulated by the HKMA and that money deposited with such institutions or platforms is not protected by the Deposit Protection Scheme in Hong Kong.
Under the Banking Ordinance, only licensed banks, restricted licence banks and deposit-taking companies that have been granted a licence to operate by the HKMA are allowed to carry on banking or deposit-taking business in Hong Kong.
Apart from the above institutions recognized by the financial regulators, it is an offence for any person to use the name or title “bank” in connection with the carrying on of business in Hong Kong, or to represent that such person is a bank or is carrying on banking business in Hong Kong. It is also an offence for any person to carry on the business of taking deposits in Hong Kong without authorization, or to invite members of the public to make any deposits.
Beware of the false claims of some trading institutions that they have obtained regulatory licenses
In recent years, virtual assets have gradually developed into a new type of asset class, attracting the attention of investors, and Hong Kong’s financial regulators have gradually strengthened regulation.
Previously, the Hong Kong Securities and Futures Commission (SFC) has issued a reminder that it has recently noticed some unlicensed virtual asset trading platforms falsely claiming that they have submitted license applications to the SFC. These false and misleading claims have led the public to believe that the trading platforms are in compliance with the regulatory requirements of the SFC.