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Thursday, December 7, 2023

Hong Kong Increases Crypto Exchange Scrutiny Following JPEX Fiasco 

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The move follows the imbroglio at the JPEX crypto exchange last month, which resulted in multiple arrests and the platform shuttering services. The unlicensed exchange is alleged to have defrauded investors out of $204 million.

The task force is comprised of the city’s Securities and Futures Commission (SFC) and law enforcement officials, including representatives from the commercial crime, cybersecurity and technology crime, and financial intelligence and investigations police bureaus.

According to the announcement, it will “enhance collaboration in monitoring and investigating illegal activities related to virtual-asset trading platforms,”

Protecting Hong Kong Public

Moreover, the JPEX saga threatens to complicate Hong Kong’s push to become a regional crypto and fintech hub.

Hong Kong rolled out a new regulatory framework for crypto assets earlier this year and granted the first mandatory licenses for digital asset trading platforms in August.

Vince Turcotte, a consultant at Cognitive GRC, a crypto license advisory firm, said:

“This strengthens the reputation of Hong Kong as a safe and compliant jurisdiction to do business in virtual assets. The formation of the task force is a proactive step to shore up confidence in the new regime.”

Hong Kong officials are striving to learn more about the 2022 crypto contagion and multiple collapses of high-profile platforms.

Assistant police commissioner Eve Chung said the working group is “instrumental to fast-tracking of vital intelligence exchange and joint collaboration in responses to the challenges arising from Virtual Asset Trading Platforms (VATPs), so as to better protect the general public of Hong Kong.”

In mid-September, the SFC contacted relevant influencers, opinion leaders, and OTC outlets, requesting they stop promoting JPEX and its services. A further crackdown on influencers linked with the defunct crypto exchange followed.

JPEX Dividends Plan

Furthermore, JPEX has continued with a controversial plan to convert users’ assets into shareholder dividends that can only be claimed in two years.

The firm claims the move will raise cash flow and retain investors. Users will get dividends in various forms in two years based on their stake, according to reports.

This week, JPEX said a referendum it held with users has concluded with 68% voting in favor of the dividends plan.

Meanwhile, police have now arrested a 19th suspect linked to the case and impounded his Porsche.

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