Hong Kong Regulator to Intensify Crackdown on Unregistered Crypto Platforms

Amid the ongoing JPEX crypto exchange scandal, the Hong Kong Securities and Futures Commission has vowed to clamp down on all suspicious cryptocurrency trading platforms in its jurisdiction.

In a September 25 announcement, the Commission said it would start by publishing a list of all licensed, closed-down, deemed licensed, and application-pending virtual asset trading platforms (VATPs). It will also release a dedicated list of “suspicious VATPs” on its website, all in a bid to ensure that “information is disseminated in a clear, transparent and timely manner.”

The efforts trail the recent JPEX scandal, which involved the alleged embezzlement of over $175 million in user funds by JPEX executives. The exchange has since been shut down and its executives are facing criminal charges. As of press time, local police had received over 2,000 complaints from affected customers of the exchange platform.

Founded in 2020, the crypto exchange made headlines on September 13 after the SFC told the public that it had received thousands of complaints from users of the unregistered platform. Although the exchange blamed its third-party market-makers for “maliciously” freezing liquidity, it quickly shut down a number of its yield-bearing products while increasing withdrawal fees to 999 USDT.

Although 11 suspects linked to the project have been arrested, the police said the ringleaders of the operation are still on the run.

The JPEX scandal has raised serious concerns about the security and regulation of crypto exchanges. It has also highlighted the need for investors to be more vigilant when choosing which exchanges to trust. The SFC notes that the JPEX fallout “highlights the risks of dealing with unregulated VATPs and the need for proper regulation to maintain market confidence.”