Crypto Chaos In Hong Kong, Regulatory Ripples Follow JPEX Scandal: Report

Sep. 20, 2023
Crypto Chaos In Hong Kong, Regulatory Ripples Follow JPEX Scandal: Report

Hong Kong authorities are intensifying their crackdown on the cryptocurrency market following the arrest of six individuals in connection with allegations of fraud at an unlicensed crypto exchange, JPEX.

Hong Kong Vows to Tighten Crypto Asset Regulations

As reported by the Associated Press, Hong Kong’s leader announced on Tuesday that the territory will be implementing stricter regulations for digital assets in the wake of these developments.

The arrests took place on Monday following a recent announcement by Hong Kong’s securities watchdog. The Securities and Futures Commission (SFC) declared that JPEX was operating without a license.

Additionally, it lacked the authority to conduct cryptocurrency trading within the city. The SFC reported over 1,400 complaints against JPEX, amounting to losses exceeding 1 billion Hong Kong dollars (approximately $127.9 million).

In addition to financial losses, some investors also alleged difficulties in withdrawing their virtual assets from JPEX accounts and unauthorized alterations to their account balances. The SFC, in conjunction with the police, is expected to release further details on the case in the coming days.

Hong Kong’s Chief Executive, John Lee, emphasized the government’s commitment to increasing investor education. He also encouraged the use of licensed platforms sanctioned by the SFC. These measures aim to safeguard investors in an increasingly complex cryptocurrency landscape.

In response to the mounting regulatory pressure, JPEX announced the suspension of trading on its platform on Monday. The exchange cited negotiations with third-party market makers to address liquidity issues for the suspension.

Hong Kong’s SFC had earlier opened the door for cryptocurrency exchanges, allowing them to serve retail investors as of June 1, provided they adhere to the regulatory framework. Professional investors primarily restricted access to such exchanges before this. Only two exchanges, OSL Exchange and Hashkey Exchange, have secured approval from Hong Kong regulators.

In a relate­d update, it has been re­vealed by Hong Kong lawmaker Duncan Chiu that the­ region is currently undertaking its se­cond series of consultations regarding guide­lines for stablecoin issuance.

Chiu expre­ssed hopes that Hong Kong would implement regulatory guidelines for stable­coin issuers by mid-next year. The­se efforts align with the re­gion’s broader ambition to position itself as a central hub for We­b3 technologies.

Ammar Raza

Associate editor
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