Embattled JPEX trying to hang on

Troubled cryptocurrency exchange JPEX is trying to work out a way to continue operation and progress if any will be announced next week, the trading platform says.

This came after eight suspects arrested on suspicion of conspiracy to commit fraud, including internet celebrity Joseph Lam Chok, were released on bail yesterday. They have to report back to police in mid-October.

Influencer Chan Yee, who is among the eight, says in a video after her release that her bail was HK$1 million.

The cryptocurrency scandal involved a financial toll of almost HK$1.2 billion with over 1,600 alleged victims, with police seizing about HK$67 million in assets after raiding 20 premises.

In a statement, JPEX insisted the platform will "unswervingly" continue its operation, while a newly formed dedicated team has been working around the clock to assist clients with priority withdrawals of their virtual assets.

"We want to clarify that our platform is cooperating with regulators, progressively removing game lobby and financial project features to comply with Hong Kong laws and continue serving the public," it said.

It is understood that JPEX can continue to operate without a license for a one-year grace period under a new regulatory regime for virtual asset trading platforms in June.

The company said it also rejects accusations by the Securities and Futures Commission that it had not been in contact with the regulator before a warning issued on September 13. It provided four screenshots of e-mails seeking guidance on obtaining a license, with one dated April last year. MTR Corp, meanwhile, said photos circulating on social media depicting JPEX advertisements in stations were taken between 2021 and 2022, adding it has not placed JPEX advertisements since June last year.

Election Committee lawmaker Doreen Kong Yuk-foon accused the SFC of not educating investors and asked why it did not name JPEX in its warning in August to prevent investors from losing more money.

"More than a billion Hong Kong dollars is a huge loss for the public to learn a lesson," she said.

Kong urged the regulator to clarify its responsibilities and scope of supervision, suggesting authorities should not rush to develop new investment products until the investment ecology and relevant supervisory system are well-established.

SFC nonexecutive director Victor Dawes said virtual asset investors should understand the investment products and relevant risks in advance, and ensure virtual asset investment platforms they use are licensed and regulated.

"Investors should not just follow the trend of investment as investment information is [all over] the internet, but they should pay extra attention to avoid falling into investment scams," he added.

Separately, the Investor and Financial Education Council found in a survey that 6 percent of 1,000 respondents have invested in virtual assets since April last year, most of whom are aged between 18 and 29.

The survey found that three-quarters indicated they will invest in virtual assets so they do not miss out on netting short-term returns.

stacy.shi@singtaonewscorp.com