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Hong Kong to tighten crypto regulation in wake of JPEX fraud case

Hong Kong to tighten crypto regulation in wake of JPEX fraud case

Hong Kong regulators are aiming to tighten regulations in the crypto market following the arrest of six individuals connected to the unlicensed crypto exchange, JPEX.

Hong Kong Chief Executive John Lee Ka-Chiu stated on Sept. 19 that the government plans to enhance efforts to inform investors and remind them to only use platforms that have Securities and Futures Commission licenses, according to the Associated Press.

The JPEX issue came to light on Sept. 13 when the SFC announced that it had received over 1,000 complaints regarding the unregistered crypto exchange platform, resulting in reported losses of over 1 billion Hong Kong dollars ($128 million).

In its warning, the SFC highlighted that JPEX had promoted its services and products to the Hong Kong public through online celebrities and over-the-counter money changers.

As the problems with JPEX became public, many platform users found themselves unable to withdraw their funds, while others complained about reduced wallet balances. Following the warning from the Hong Kong watchdog, the platform reportedly raised its withdrawal fee to $1,000 in an attempt to discourage users from withdrawing their assets.

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The crypto exchange later attributed the ongoing liquidity crisis on the platform to third-party market makers, resulting in the increase of the withdrawal fee. Influencer Joseph Lam (Lin Zuo) was also arrested by Hong Kong police due to his connection with JPEX.

In 2023, Hong Kong established itself as a growing crypto hub, implementing pro-crypto legislation and opening the crypto trading market for retail customers. However, unlicensed crypto platforms like JPEX have deceived many users in the country due to a lack of knowledge and awareness. The regulatory body is now working to educate people about the importance of using only licensed platforms for their crypto trading activities.

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