TechFlow news — According to the Hong Kong Wen Wei Po, the Hong Kong SAR government police and the Securities and Futures Commission (SFC) jointly held a press conference yesterday to announce details regarding the JPEX case. Based on JPEX's operating model and promotional methods, authorities identified five elements indicative of suspected fraud:
1. JPEX has neither applied for nor obtained an SFC license, yet declared on its website to be "a licensed and recognized digital asset and virtual currency platform." It extensively promoted itself through advertisements, media, over-the-counter exchange counters (OTCs), and influencers to create popularity and attract investors.
2. Influencers made false and misleading statements online, flaunting wealth to fabricate the illusion of "getting rich quick by buying cryptocurrency," thereby increasing persuasiveness. However, since the SFC had previously issued warning letters to these individuals and physical outlets, there is reason to believe the involved parties were aware that JPEX’s practices were in violation of regulations, yet continued promoting it to clients.
3. After users registered on JPEX, they could exchange various cryptocurrencies on the platform or transfer virtual assets from foreign platforms into their JPEX accounts for trading. However, investigations revealed that JPEX also issued its own cryptocurrency, JPC. Unlike mainstream cryptocurrencies, JPC cannot be traded on other platforms nor used for payments. Some victims were persuaded to purchase JPC and engage in so-called "staking," akin to fixed-term deposits, promising extremely high returns only upon maturity. Additionally, JPEX required customers to provide private keys for "safekeeping," effectively allowing JPEX to control users’ assets.
4. After receiving warnings from the SFC, JPEX arbitrarily limited user withdrawals to a maximum of USD 1,000 and imposed a withdrawal fee of USD 999, effectively restricting access to funds.
5. In the early hours of the 18th, JPEX took down all its wealth management and trading services from its website.
