On Friday, officials in Hong Kong and Macao said that they had arrested four more people with ties to the cryptocurrency exchange JPEX, which is accused of bilking over 2,400 users out of about $200 million.
The overall number of detentions has now reached 18 after these arrests, which the authorities have described as involving those “relatively close” to the core of the issue.
Police in Hong Kong announced the arrest of two individuals on Friday, one of whom had been using paper shredders and laundry bleach to destroy papers.
Inquiry Into JPEX Operations
The most recent police investigation resulted in the seizure of cash and gold totaling approximately $9 million Hong Kong dollars ($1.15 million) from three separate apartments.
Following increased regulatory monitoring of JPEX, which resulted in the freezing of cash on the exchange platform, the latest arrests have taken place. Recent allegations of unlicensed operation by the Hong Kong Securities and Futures Commission led to the freeze of JPEX’s assets.
The inquiry has reportedly reached those “very close” to the core of JPEX’s operations, according to Assistant Police Commissioner Chung Wing-man, but it is unclear at this time if the mastermind is a group or an individual.
This example highlights the necessity for strict crypto licensing legislation, and the regulatory agency has stated its plan to publish information about license applicants as a response.
As of today, the market cap of cryptocurrencies stood at $1.05 trillion. Chart: TradingView.com
Hong Kong’s leader John Lee has stated the episode demonstrates the necessity for strict crypto licensing rules, but the exchange has said its “unfair” treatment could threaten Hong Kong’s efforts to become a crypto center.
Impact On Investors
Meanwhile, a number of investors had their account balances changed or were unable to withdraw money. JPEX halted trading and placed the blame on a third-party market maker for “maliciously” freezing funds.
According to Cyber Security and Technology Crime Bureau Chief Superintendent Cheng Lai-ki:
“This case involves thousands of e-wallets and tens of thousands of transactions. Because of the anonymity of cryptocurrency in the cyber realm, it makes it quite difficult to identify the criminal behind (this case).”
The freezing of JPEX’s assets and the revelation of information about license applicants by the SFC are indicative of a broader trend towards the implementation of rigorous cryptocurrency licensing regulations.
These rules are thought to be essential for preserving the standing of financial centers like Hong Kong and safeguarding investor interests.
The necessity for efficient regulatory frameworks is becoming more and more obvious as cryptocurrency marketplaces develop. Regulators all across the world are trying to strike a balance between encouraging new ideas and protecting investors.
Featured image from Ledger