Hong Kong police have arrested a prominent social media influencer, Joseph Lam Chok, on suspicion of promoting an unlicensed crypto exchange known as JPEX.
Lam Chok, who also works as an insurance manager, is facing allegations of encouraging investors to open accounts on JPEX and exchange their funds for cryptocurrencies.
The arrest comes after a surge in reports against JPEX, with an estimated total loss of HK$34 million reported to the authorities.
Hong Kong police have arrested a Hong Kong internet celebrity on suspicion of promoting Rugpull crypto exchange JPEX. At present, the Hong Kong police have received more than 83 reports against JPEX, involving approximately HK$34 million. https://t.co/gmYi68Uwxn
— Wu Blockchain (@WuBlockchain) September 18, 2023
Lam Chok’s arrest shed light on the growing concern surrounding the operations of JPEX. The Securities and Futures Commission (SFC) has expressed its apprehensions regarding the platform, highlighting its aggressive marketing strategies to attract the Hong Kong public.
JPEX has been utilizing internet celebrities and “over-the-counter” exchange shops as part of its promotional activities. However, the SFC has emphasized that JPEX and its entities do not possess the necessary licenses to operate as a virtual digital asset trading platform in Hong Kong.
Notably, Lam Chok claimed to be a partner of JPEX, although he did not hold any shares in the company. His arrest followed a search of his office premises, during which officers confiscated several boxes of potential evidence, including a substantial amount of banknotes.
The investigation into JPEX’s activities was prompted by a referral from the China Securities Regulatory Commission, which raised suspicions of fraud related to the cryptocurrency exchange.
In response, the Hong Kong police established a hotline to encourage the public to report any suspicious activities linked to JPEX. To date, they have received over 83 reports from concerned citizens.
The concerns about JPEX go beyond unlicensed operations. The exchange has allegedly claimed to possess licenses from overseas regulators and has lured investors with promises of high returns on savings products.
Regulators have cautioned the public against JPEX, citing the dissemination of false and misleading information on the company’s website.
Moreover, it has come to light that JPEX has heavily relied on social media influencers like Lam Chok to promote its services. These influencers, often paid for their endorsements, have been accused of sharing misleading statements that contributed to the platform’s appeal.