Who’s The Mastermind Behind JPEX, Hong Kong’s Biggest Alleged Fraud? Over $200M Lost, 72 Arrested including Youtuber Chan Yee

Unlicensed Platform, Enormous Losses

Hong Kong authorities are cracking down on a massive cryptocurrency exchange scandal, with over 70 arrests made so far. The JPEX exchange, accused of being an unlicensed platform engaged in suspicious activities, stands at the center of this HK$1.6 billion (US$200 million) fraud case – the largest of its kind in the city.

JPEX Exchange being advertised as a Japan Exchange in Hong Kong.

Red Flags and Rugpull

The trouble started with allegations of a "rugpull," a scheme where developers abandon a project after artificially inflating its price, leaving investors with worthless tokens. This suspicion was further fueled by JPEX's involvement in a suspected money laundering operation.

Unlicensed Operation and Regulatory Crackdown

The alleged JPEX scam came to light on 13 September when the Hong Kong Securities and Futures Commission (SFC) issued a warning to investors, specifically naming JPEX as an unlicensed cryptocurrency exchange with suspicious features. This was the first time SFC had singled out JPEX, having previously issued nine alerts about unlicensed virtual asset trading platforms engaging in improper practices.

The SFC also revealed that online influencers and OTC shops had been spreading false or misleading information, claiming that JPEX had applied for a virtual asset trading platform (VATP) license in Hong Kong, which was not the case. This warning marked the beginning of the scandal coming to light, exposing the alleged fraudulent activities of JPEX.

JPEX, however, refuted these claims, calling them unsubstantiated. This incident exposed gaps in Hong Kong's crypto regulations, prompting the SFC to tighten its grip on the digital asset market.

Abandoned Booth at Singapore’s Token2049

The Token2049 event in Singapore, held on September 13-14, marked the beginning of the end for JPEX as attendees witnessed the sudden and mysterious abandonment of their booth on the second day, a stark contrast to the exchange's earlier boasts of active participation, foreshadowing a downward spiral that would soon send shockwaves through the crypto community.

A wave of panic washed over the crypto community as the news spread, with users scrambling to withdraw their investments and the exchange's reputation in tatters.

Endorsement Gone Wrong with 2,600 Reports Filed

Investigations uncovered a network of social media influencers who promoted JPEX, including Chan Wing-yee, Joseph Lam Chok, and Sheena Leung, who were subsequently arrested alongside JPEX technical support staff and prominent online personalities. These influencers allegedly appeared in advertisements and even operated shops associated with the exchange, deepening the scandal.

Authorities have received a staggering 2,636 reports related to the case, highlighting the widespread impact of this alleged fraud and the significant role influencers played in promoting JPEX.

Social Media Influencers at the Center of the JPEX Storm

Who is Chan Wing-yee

Source: am730

Chan Wing-yee, aka "Chan Yee", is a prominent YouTuber with a significant following of over 215,000 subscribers and founder of the cryptocurrency exchange CYOTC. She was seen actively promoting JPEX before the downfall.

Chan Yee is known for being a crypto KOL with the largest fan base in Hong Kong.

As an influential voice in the investment and business community, Chan Yee's endorsement of JPEX has carried considerable weight, making her a key figure in the ongoing saga.

Her YouTube channel, focused on investment and business news, has been a platform for her to shape the narrative around JPEX. The day before her arrest on 19 September, she released two videos in which she criticised the Securities and Futures Commission (SFC), questioning its actions regarding JPEX. She described the SFC as "正貪會", which means corrupt SFC, and suggested that it was targeting JPEX to protect "underlying interests".

Who is Joseph Lam Chok

Source: The Standard

Joseph Lam Chok, a former barrister turned insurance manager and active social media influencer, has been identified as another key figure in the JPEX controversy. Lam, who operated an Over-The-Counter (OTC) crypto exchange store in Hong Kong, publicly announced his intention to join JPEX as a partner in July last year and later confirmed his partnership to local media. As an influencer, he used his online presence to promote JPEX and encourage investments, raising serious questions about his role in the platform's troubled dealings.

In a statement, Lam claimed to have severed ties with JPEX, stating

"The business I am involved in is not related to exchanges. I am unable to locate the owner of that platform."

He was arrested on 18 September and later granted bail on 22 September, amid an ongoing investigation into JPEX's activities.

Who is Sheena Leung

Sheena Leung, aka "Xiāng Xiāng" (湘湘), is a 29-year-old internet celebrity and cryptocurrency influencer, known for sharing investment insights on her YouTube channel "Xiāng Xiāng Tóu Zī Rì Jì" (湘湘投資日記).

Source: hk01.com

As an employee of Unicoin, a leading over-the-counter cryptocurrency exchange, her opinions carry significant weight in the financial community. Her channel, which has gained a substantial following, is no longer unavailable.

Sheena Leung's YouTube channel "Xiāng Xiāng Tóu Zī Rì Jì" (湘湘投資日記 – which means Xiāng Xiāng's Investment Diary) that is no longer available. (Source: hk01.com)

Celebrities Caught in JPEX Controversy

Not just social influencers were involved, several celebrities have been linked to the controversial JPEX crypto platform.

In July 2020, Hong Kong actor and singer Julian Cheung Chi-lam appeared in advertisements, leveraging his fame to promote the platform.

Later in July, Malaysian actress Jacquelin Ch'ng Se-min also filmed a promotional video for the platform, though it has since been taken down. Ch'ng later claimed she lost over HK$100,000 after investing in JPEX and has distanced herself from the company.

In November 2022, Taiwanese singer Nine Chen signed on as a spokesperson, but according to Chen, he terminated his association with the platform in July the following year.

Frozen Assets and Legislative Action

Police efforts have resulted in the freezing of nearly HK$228 million (US$29.37 million) in assets believed to be linked to the scam. This decisive action aims to recover some of the lost funds for victims. The JPEX scandal has also triggered a call for stricter regulations. In response to the case and a recent fatal fire, the government is expediting amendments to increase penalties for non-compliance with fire safety regulations.

Seizures, Arrests, and Witness Testimony

The investigation intensified with the seizure of assets worth $11 million and the arrest of key figures. This included JPEX employees, social media personalities, and even a prominent educator linked to the exchange. The latest arrest was Chang Tung-Ying, the alleged chief partner of JPEX, alongside Shi Yu.

Higher Ups Still a Mystery

While 72 suspects are now in custody, the identities of JPEX's founders and top management remain shrouded in secrecy. This lack of transparency raises further questions about accountability within the exchange. As investigations continue, the public awaits the possible exposure of the masterminds behind this significant cryptocurrency fraud.

Adding to the mystery, reports suggest that JPEX is based in Dubai. This raises the possibility that the founders and top management are currently residing there, potentially beyond the reach of Hong Kong authorities. If true, this could significantly complicate efforts to hold them accountable for their alleged crimes. International cooperation between law enforcement agencies may be required to bring them to justice.

Defiant Exchange Hits Users with High Withdrawal Fees

Despite facing accusations and arrests, JPEX remained operational and even resorted to a tactic often seen in rugpulls – imposing exorbitant fees on users attempting to withdraw their virtual assets. This further fueled suspicion and cemented the belief that the exchange was fraudulent.

Victims of the JPEX Scandal

The JPEX cryptocurrency exchange scandal has left a trail of financial losses for investors. While the investigation progresses and assets are frozen, it's unclear how much, if any, money will be recovered by the victims.

Justice on Trial

This massive crypto exchange scandal highlights the vulnerabilities of the digital asset market and the need for stricter regulations. With over 70 suspects apprehended and millions lost, the case is a stark reminder of the potential dangers lurking in the world of cryptocurrency. As the investigation progresses, the world watches with bated breath to see if justice will be served for the victims and if the missing masterminds behind JPEX will be brought to light.