HONG KONG — Hong Kong police initiated criminal proceedings against 16 individuals late Sunday and in recent days as part of the ongoing investigation into the alleged massive fraud scheme involving the defunct virtual asset trading platform, JPEX. The indictments signal a major escalation in the high-profile case, which has shaken the city’s nascent cryptocurrency sector and involved significant financial losses for thousands of investors.
Sources familiar with the investigation confirmed that renowned local influencers Lam Cheuk (known as “Joseph Lam”) and Chan Yee were among those formally charged. Both have been prominent figures linked to the promotion of JPEX assets.
The charges follow a lengthy police probe into the exchange, which collapsed earlier this year amid allegations of operational irregularities and unauthorized public appeals involving millions of Hong Kong dollars.
Prominent Figures Face Charges
The sweeping action by the Hong Kong Police Force comes nearly two months after initial arrests linked to the platform’s operations and aggressive marketing strategies. The specifics of the charges against the 16 individuals were not immediately disclosed, but they are expected to relate to conspiracy to defraud and money laundering activities associated with the platform’s collapse.
Joseph Lam, a controversial but widely followed social media personality, was reportedly taken into custody following a required police report earlier in the day.
Wada Yumi, Lam’s girlfriend, provided a statement to local media, expressing a measured perspective on the unfolding legal drama. She confirmed that she has been in contact with Lam through his legal counsel, who is preparing for his court appearance slated for Monday.
“This process has been ongoing for nearly two years. This is simply the inevitable next step,” Ms. Yumi stated, indicating a degree of resignation regarding the complexity and longevity of the case.
‘Focusing on Solutions, Not Worry’
Ms. Yumi described the suddenness of Lam’s detention, reporting that she “woke up” to an emergency call from him, informing her that he would not be returning home and was being held by police. Lam reportedly instructed her to handle minor logistic tasks, including moving his car and publicly notifying his clients that he would miss scheduled appointments.
While acknowledging the severity of the situation, Ms. Yumi maintained a pragmatic approach. She emphasized the need to focus on legal remedies rather than emotional distress.
“Worrying is a waste of time. The priority must be finding a solution,” she asserted. She added, somewhat humorously, that she had not yet received instruction from Lam’s lawyers regarding whether he required any specific comfort food, such as char siu fan (barbecued pork rice) or iced lemon tea, while detained.
The JPEX scandal has become the largest alleged financial fraud case involving a cryptocurrency exchange in Hong Kong’s history, prompting a sharp regulatory response from the Securities and Futures Commission (SFC). The event highlighted the regulatory gaps surrounding the aggressive promotion of unregulated virtual asset schemes by social media influencers.
Regulatory Implications
The charges underscore the Hong Kong authorities’ commitment to cracking down on financial misconduct in the digital asset space. The SFC has since issued clearer guidelines and investor alerts regarding the solicitation of virtual asset investment, emphasizing that only licensed platforms are permitted to operate within the jurisdiction.
Investors affected by the JPEX collapse are urged to cooperate with the police investigation. Experts suggest this case will serve as a critical precedent, likely leading to more stringent oversight, particularly concerning the third-party promotion and marketing of crypto products in the semi-autonomous territory. Monday’s court arraignment is expected to shed more light on the allegations facing the 16 defendants.
Key Takeaways for Investors:
- Verify Platform Status: Ensure any cryptocurrency platform is fully licensed by the Hong Kong SFC.
- Beware of Influencer Promotions: High-risk financial products promoted solely by social media figures often lack proper regulatory vetting.
- Report Suspicion: Contact local police or the SFC immediately if fraud is suspected.
