In a dramatic turn of events, Hong Kong authorities have apprehended Joseph Lam (Lin Zuo), a social media influencer, in connection with the troubled JPEX exchange. Lam, a former lawyer turned insurance agent, is one of six individuals taken into custody following reports from over 1,000 investors linked to the exchange. The arrests, carried out by Hong Kong police, have sent shockwaves through the cryptocurrency community. With potential losses estimated at a staggering HK$1 billion (US$128 million), this unfolding saga has far-reaching implications.
Joseph Lam's involvement in the JPEX exchange has come under intense scrutiny. Allegedly, he presented multiple investment strategies within a cryptocurrency group, luring investors like Miss Chen into committing substantial sums. Chen, for instance, reportedly invested 100,000 Hong Kong dollars ($12,800) in cryptocurrency, only to find herself embroiled in this complex web of financial turmoil.
The Hong Kong police's operation at Lam's office in Central's Entertainment Building uncovered crucial evidence, including a bag of banknotes. Before his arrest, Lam had cooperated with law enforcement on September 15, attempting to distance himself from JPEX and assist in fund recovery. He vehemently denied any involvement with the exchange, disputing allegations of partnership.
As the investigation unfolds, JPEX has been forced to take drastic measures. The cryptocurrency platform temporarily suspended certain trading activities in response to mounting pressure from Hong Kong law enforcement. Investors can no longer initiate new orders through its Earn Trading interface, particularly for specific wealth management products. Furthermore, JPEX is actively engaging third-party market makers to address liquidity shortages.
This turbulent episode stems from a referral by the Securities and Futures Commission (SFC), Hong Kong's financial watchdog. The SFC raised concerns that JPEX was operating in the city without the requisite licensing, a significant breach of regulations amid Hong Kong's aspirations to establish itself as a cryptocurrency hub. The regulator also received complaints from retail investors who faced difficulties in withdrawing virtual assets from their JPEX accounts, coupled with reports of altered and reduced account balances.
