Hong Kong SFC Opens Probe Into JPEX Exchange, One Arrested

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The Hong Kong Securities and Exchange Commission (SFC) has opened a probe into the cryptocurrency exchange JPEX, leading to the arrest of one individual attached to the exchange. 

According to reports, the Hong Kong police received 83 complaints about the exchange, which has allegedly been operating without a license. 

JPEX Suspends Trading Following SFC Probe 

Hong Kong-based cryptocurrency exchange JPEX has suspended trading operations following a probe initiated by the Hong Kong Securities and Futures Commission. The probe has led to the arrest of one person connected to the exchange. The Securities and Futures Commission has stated that the cryptocurrency exchange has been operating in Hong Kong without the relevant licenses in place. Authorities have also stated they have received numerous complaints against the platform. 

The Securities and Futures Commission had recently issued a warning to the JPEX exchange, alleging that it was promoting its services to the residents of Hong Kong without holding a relevant VATP license. It further added that JPEX had yet to initiate the application process for obtaining a VATP license. 

Apart from outlining several alleged flaws on JPEX’s website in the warning, it also disputed the claim that JPEX had received approval for cryptocurrency trading in its jurisdiction. 

“It claims on its website and local advertorials to have obtained licenses from certain overseas regulators to operate VATP, which is, in fact, not true.”

The Hong Kong Monetary Authority also warned the crypto community that companies offering cryptocurrency-related services should refrain from identifying themselves as banks. They should also refrain from using banking-related content in their marketing materials. The warning also emphasized that the word “bank” can only be used by legally licensed financial institutions and deposit-taking companies. 

JPEX Alleges Unfair Treatment 

Meanwhile, the JPEX exchange has alleged unfair treatment by institutions in Hong Kong. The exchange stated in a blog post that its third-party market makers had maliciously frozen their funds after a series of unfavorable news reports. The restricting of liquidity led to significant increases in the exchange’s operating costs, leading to severe operational difficulties. 

“Recently, due to the unfair treatment by relevant institutions in Hong Kong towards JPEX, a cryptocurrency trading platform, and a series of negative news, our partnered third-party market makers have maliciously frozen funds. They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties.”

The exchange added that it would delist all transactions on its Earn Trading interface on Monday while trying to ensure ongoing orders and adjusting withdrawal fees accordingly. JPEX also stated that it would consider restructuring as a decentralized autonomous organization (DAO) because, in order to ensure that the platform remains stable, it must make significant changes to the structure. 

“We promise to recover liquidity from third-party market makers as soon as possible and gradually adjust the withdrawal fees back to normal levels.”

Reports have also stated that JPEX had recently vacated its office in Taipei, while authorities have also questioned Taiwanese influencers hired by the exchange. JPEX claims to be regulated by securities authorities in Australia. It also says it has registration with the US Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB).

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.