Hong Kong Charges 16 in $205 Million JPEX Crypto Fraud Probe

In brief

Hong Kong authorities have charged 16 including influencer Joseph Lam over the $205 million (HK$1.6 billion) JPEX crypto fraud case.
Police say over 2,700 investors were defrauded through JPEX’s network of influencers and OTC shops.
Interpol red notices have been issued for three alleged ringleaders still at large.

Hong Kong authorities have charged 16 people, including influencer and former lawyer Joseph Lam Chok, over their alleged involvement in the $205 million (HK$1.6 billion) JPEX crypto fraud.

The suspects were accused of fraud, conspiracy to defraud, and money laundering under Hong Kong’s anti-money-laundering law after a two-year investigation into the unlicensed exchange, according to a report from South China Morning Post.

Police said more than 2,700 investors were defrauded through JPEX’s network of social media promoters and retail crypto shops, which funneled deposits into the unlicensed platform.

Lam was among several influencers arrested in September 2023 after promoting JPEX to his social media followers. His arrest came shortly after the Securities and Futures Commission warned that JPEX was unlicensed and misleading investors, prompting police to launch a fraud probe as users reported frozen withdrawals.

Investigators have since made more than 80 arrests since 2023, seizing $28 million (HK$228 million) in assets and securing Interpol red notices for three suspected ringleaders who remain at large, per SCMP.

The JPEX case is a “straightforward” one, with section 53ZRG of Hong Kong’s anti-money laundering ordinance AMLO leaving “no ambiguity,” Joshua Chu, lawyer, lecturer, and co-chair of the Hong Kong Web3 Association, told Decrypt.

“KOLs who repeatedly promoted false claims about JPEX being safe and have backings of regulatory licenses, despite explicit warnings from the SFC, expose themselves to liability whether they actively knew those claims were false or simply failed to perform basic due diligence,” Chu explained.

‘I slept well’

Days after getting released on bail in 2023, Lam reportedly held a press conference where he told reporters he had “slept well.”

Looking back, the 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,” Chu said, noting that the “public demonstration of indifference” may weigh in how the court assesses Lam’s culpability, and may “severely undercut any hope for mitigation at sentencing.”

Such “tactical missteps” for Lam’s defense have piled up, such that they have failed “to initiate any meaningful engagement with the authorities,” before being formally charged, Chu opined.

That “silence and inaction” had also “deprived victims of potential avenues for meaningful redress,” he added.

Still, the JPEX prosecution is “only the tip of the iceberg,” Chu said, citing “multiple layers of transactions still under scrutiny“ with a deeper and more complex network of perpetrators yet to be uncovered.

For now, it’s the victims that face a harsh reality.

Recovery for the losses “will depend not merely on these criminal convictions, but on tracing asset flows,” Chu explained. “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.”