Hong Kong Influencer Arrested Over JPEX Exchange Promotion

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Hong Kong Influencer Arrested Over JPEX Exchange Promotion
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Social media influencer Joseph Lam Chok was arrested in Hong Kong on Monday, following the suspension of trading on crypto exchange JPEX.

Lam, a trained lawyer turned insurance broker who has hundreds of thousands of followers on Instagram, was among six individuals detained by Hong Kong police in connection with the exchange, according to South China Morning Post. Lam’s arrest related to his promotion of the Dubai-based exchange, which regulators alleged had been operating in the country without a license. Per local news reports, officers also seized evidence including a laptop and cash.

Prior to Lam’s arrest, JPEX had suspended withdrawals, claiming in a statement that due to “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.”

Police had received more than 80 complaints from users of the exchange, claiming they had been blocked from withdrawing HK$34 million ($4.3 million) worth of assets stored on the platform. According to the South China Morning Post, the number of complaints has now reached more than 1,000, with north of $12 million frozen. 

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Prior to his arrest, Lam had visited police on September 15 to clarify his relationship with JPEX and to assist in the recovery of funds on the trading platform. Lam, it is alleged, denied the claims that he was a partner of the exchange, and had been responsible for promoting it to his followers.

JPEX had “suspicious features”

The arrest comes days after the Hong Kong regulator issued a statement that the “unlicensed” JPEX had been actively promoting its products and services to citizens through social media influencers, key opinion leaders and over-the-counter crypto exchange shops.

The regulator cautioned the public to be wary of any opportunities that seemed “too good to be true,” and had accused JPEX directly of having “suspicious features”.

The exchange promised on Sunday that it would “gradually adjust the withdrawal fees back to normal levels.” There will be a dedicated withdrawal team responsible for handling emergency withdrawal requests, it added.

The arrest comes amidst Hong Kong authorities’ push to clamp down on cryptocurrency-related frauds and scams. Citizens have lost $90 million to investment scams in the first four months of 2023.

Since July last year, the securities regulator has included two JPEX-affiliated companies on its alert list, indicating that the platform was soliciting Hong Kong investors without proper licenses.

According to the Commission, the trading platform had also falsely claimed that it had obtained licenses from foreign regulators, as well as offered high returns on savings products.

It said JPEX relied on misleading statements made by social media influencers “who are often paid promoters”.

As part of Hong Kong’s push to become a crypto hub, the Securities and Futures Commission (SFC) launched its VATP regulatory regime in June, mandating that exchanges servicing retail customers apply for and receive approval within a one-year grace period.

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