Hong Kong Charges 16 in $205M JPEX Crypto Fraud Case

The JPEX cryptocurrency exchange operated as an unlicensed platform that systematically defrauded investors through a carefully constructed network of social media influencers and over-the-counter (OTC) crypto shops. According to police investigations, more than 2,700 investors were drawn into the scheme, with deposits funneled into the platform through these channels. The case represents one of Hong Kong’s largest financial fraud investigations, with authorities making more than 80 arrests since 2023 and seizing approximately $28 million in assets connected to the operation.

The scheme began unraveling in September 2023 when the Securities and Futures Commission (SFC) issued explicit warnings that JPEX was operating without proper licensing and misleading investors. This prompted immediate police action as users began reporting frozen withdrawals from the platform. The timing proved crucial, as it established a clear timeline showing that promoters continued to advocate for JPEX even after regulatory warnings had been publicly issued.

International cooperation has become essential to the investigation, with Interpol issuing red notices for three suspected ringleaders who remain at large. The global nature of the manhunt underscores the cross-border challenges inherent in policing cryptocurrency fraud, particularly when perpetrators leverage international financial systems and digital platforms to obscure their activities and movement.

Joseph Lam, a prominent social media influencer and former lawyer, stands among the 16 individuals formally charged in connection with the JPEX fraud. His case highlights the evolving legal landscape surrounding influencer marketing in financial services, particularly within the largely unregulated cryptocurrency space. According to legal expert Joshua Chu, co-chair of the Hong Kong Web3 Association, section 53ZRG of Hong Kong’s anti-money laundering ordinance leaves ‘no ambiguity’ about the liability facing influencers who promoted false claims about JPEX’s safety and regulatory status.

Chu explained that key opinion leaders (KOLs) who repeatedly promoted JPEX as safe and properly licensed—despite explicit warnings from the SFC—expose themselves to liability regardless of whether they actively knew the claims were false or simply failed to perform basic due diligence. This legal interpretation suggests that influencers cannot claim ignorance when promoting financial products, particularly after regulatory authorities have issued specific warnings about those products.

Lam’s conduct following his initial arrest has drawn particular scrutiny from legal observers. Days after being released on bail in 2023, Lam held a press conference where he told reporters he had ‘slept well.’ Chu noted that this remark ‘reflects not only a stark lack of contrition or empathy to those adversely affected, but also raises questions about the diligence of his legal advisors.’ Such public demonstrations of indifference may significantly impact how courts assess culpability and could ‘severely undercut any hope for mitigation at sentencing.’

The defense strategy employed by Lam and other accused parties has drawn criticism from legal experts who observe significant tactical missteps. According to Chu, the defendants failed ‘to initiate any meaningful engagement with the authorities’ before being formally charged. This ‘silence and inaction’ not only weakened their legal position but also ‘deprived victims of potential avenues for meaningful redress,’ compounding the harm caused by the original fraud.

The JPEX prosecution represents what Chu describes as ‘only the tip of the iceberg,’ with ‘multiple layers of transactions still under scrutiny’ and a ‘deeper and more complex network of perpetrators yet to be uncovered.’ This suggests that the current charges against 16 individuals may represent just the initial phase of a much broader investigation that could eventually encompass additional participants in the fraud scheme.

For the more than 2,700 victims who lost funds through JPEX, the path to recovery remains challenging. Chu explained that meaningful compensation ‘will depend not merely on these criminal convictions, but on tracing asset flows.’ The ‘best chance for meaningful compensation still lies in tying claims directly to the main platform assets, rather than the more dispersed proceeds and indirect holdings in the hands of KOLs.’ This distinction is crucial, as pursuing individual influencers for recovery may yield limited results compared to targeting the platform’s core assets.