Victims of Hong Kong JPEX cryptocurrency say scandal exposes ‘loopholes’ in regulatory regime: ‘I have cried for many sleepless nights’

A group of victims of Hong Kong’s biggest alleged financial fraud have called on the city’s investment regulator to supervise not only unlicensed cryptocurrency platforms, but also over-the-counter (OTC) virtual asset money changers, industry education centres and related advertising.

“The JPEX incident has exposed many loopholes of the city’s regulation of cryptocurrency trading, including the lack of supervision of OTC shops, cryptocurrency education centres and relevant advertising at public transport facilities to mislead investors,” Penny* said.

“There has also been a lack of a comprehensive regulation system to trace and protect investors’ virtual assets. We call on authorities to set up a task force to extend their regulation of other related cryptocurrency agencies and better protect investors’ assets.”

The JPEX cryptocurrency platform is at the centre of a growing HK$1.57 billion (US$200.7 million) financial scandal involving 2,569 victims.

At the press conference organised by lawmaker and tech entrepreneur Johnny Ng Kit-chong, three victims described how they had lost their life savings after being persuaded by celebrities, influencers and OTC shops to invest in the unlicensed cryptocurrency platform.

Penny said she had put more than HK$1 million into buying JPC, a token issued by JPEX which could be traded only on the platform, in July after joining influencer Joseph Lam Chok’s WhatsApp group that allegedly advised investors to put their money into the asset.

“Lam persuaded us to put our money into JPEX via OTC shop Coingaroo, whose staff assured us that we would get a return of over 20 per cent after one year,” she said. “Lam also claimed that there would be no problem of JPEX getting a licence. He even showed us he had invested HK$420,000 in JPEX.”

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Lam was arrested in connection with the alleged fraud, along with 27 others including internet personality Chan Yee and feng shui master Clement Chan Ting-bong. Actor and singer Julian Cheung Chi-lam and Malaysian actress Jacquelin Ch’ng Se Min have also been questioned by police.

After the alleged fraud came to light in September, Penny said she suffered from insomnia every night.

“I have cried for many sleepless nights. My heart aches over the loss of my life savings,” she said. “Now I have financial difficulties because I don’t have any money to provide for my family.”

Josephine* said she put her savings of more than HK$200,000 into buying JPEX’s tokens in August based on her trust in Chan Yee, who allegedly persuaded her fans to invest via her own OTC shop called CYOTC.

“I have wrongly trusted Chan Yee,” she said. “Why does someone who did the wrong thing not need to be held responsible for their wrongdoings?”

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The cryptocurrency scandal gripping Hong Kong

The cryptocurrency scandal gripping Hong Kong

Lawmaker Ng, who has received more than 400 complaints from investors claiming to be victims of JPEX, said some had been weighing whether to sue in an attempt to get their money back.

“So far they are still considering legal action, and there has not been any conclusion yet. We hope authorities will strengthen the regulation of cryptocurrency platforms and related agencies and to strengthen education for investors about cryptocurrency trading,” he said.

Solomon Chan Siu-long, chief executive of OTC shop CryptoPARD, told a separate media briefing he was a victim of the scandal.

He was arrested earlier this month along with five others on suspicion of conspiracy to defraud, but on Thursday said he did not know the other men.

“The incident caused business to plummet more than 90 per cent, costing me a loss of more than eight figures,” he said.

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As a result, his Tsim Sha Tsui branch was suspending operations, he said.

According to Chan, his company’s main source of revenue was tuition fees from cryptocurrency courses and providing currency exchange services.

“We will no longer promote any unlicensed cryptocurrency exchanges in the future,” he said.

*Names changed at interviewees’ request