Hong Kong Charges 16 in $205 Million JPEX Crypto Fraud Probe
Hong Kong authorities have charged 16 individuals, including influencer and former lawyer Joseph Lam Chok, over their alleged involvement in the $205 million JPEX crypto fraud. More than 2,700 investors were defrauded through social media promotions and crypto shops linked to the unlicensed platform, prompting investigations that led to over 80 arrests and the seizure of $28 million in assets since 2023. Lam and other influencers allegedly misled the public, ignoring warnings from financial regulators. Legal expert Joshua Chu criticized the lack of contrition shown by Lam and highlighted significant legal missteps in his defense. With asset tracing key to victim compensation, the case reveals a deeper network of suspects and transactions still under investigation.
Overview of the JPEX Crypto Fraud Case
Authorities in Hong Kong have brought charges against 16 individuals, including influencer and former lawyer Joseph Lam Chok, for their alleged involvement in the $205 million (HK$1.6 billion) JPEX crypto fraud. The suspects face allegations of fraud, conspiracy to defraud, and money laundering under Hong Kong’s anti-money-laundering law, following a two-year investigation into the unlicensed crypto exchange, according to the South China Morning Post (SCMP).
How the Fraud Operated
Police revealed that over 2,700 investors were scammed through JPEX’s network of social media influencers and retail crypto shops that directed deposits to the unlicensed platform. Lam, one of the influencers arrested in September 2023, had actively promoted JPEX to his followers. His arrest came shortly after the Securities and Futures Commission (SFC) issued a warning about JPEX being unlicensed and misleading to investors. These developments prompted users to report issues like frozen withdrawals, leading to a police investigation.
Seizures and Arrests in the Investigation
Since 2023, investigators have made over 80 arrests, seized $28 million (HK$228 million) in assets, and issued Interpol red notices for three suspected ringleaders who remain at large, according to SCMP. The investigation continues to uncover layers of financial transactions linked to JPEX's operations.
Legal Perspectives and Liability of Influencers
Joshua Chu, a lawyer and co-chair of the Hong Kong Web3 Association, described the case as "straightforward" under Hong Kong’s anti-money laundering ordinance, specifically section 53ZRG. Chu highlighted that key opinion leaders (KOLs) who falsely promoted JPEX as a safe platform, despite warnings from the SFC, are legally exposed for either deliberately misleading or failing to perform basic due diligence. This underscores the serious consequences of promoting unlicensed platforms.
Joseph Lam’s Controversial Remarks
After being released on bail in 2023, Lam's statement that he had "slept well" left many questioning his empathy for those affected by the fraud. Chu critiqued this remark, stating it demonstrates a "stark lack of contrition or empathy." This statement may negatively influence court assessments of Lam’s culpability and weaken any attempts at mitigating his sentence. Chu further criticized Lam's legal team for failing to engage meaningfully with the authorities, which denied victims potential avenues for redress.
Wider Implications of the JPEX Case
Joshua Chu emphasized that the cases filed against JPEX representatives are "only the tip of the iceberg." He noted that multiple transaction layers and a deeper network of perpetrators are still under investigation. The recovery of losses, Chu explained, depends not just on criminal convictions, but on tracing the flow of assets tied to the main platform, as opposed to more dispersed holdings controlled by the influencers.