Troubles for JPEX may not be over yet. The Hong Kong-based crypto platform – JPEX – has come under scrutiny as a potential hub for money laundering, according to Bitrace.
The development emerged after JPEX came under suspicion for a potential rug pull.
JPEX Money Laundering Accusations
Bitrace’s report alleged that a recently flagged address associated with JPEX has facilitated the movement of over 190 million TRC20-USDT tokens over the last 20 months. This raised concerns among investors who are engaging in withdrawals from or deposits into the crypto exchange, as there may be associated risks.
Of late, Hong Kong has risen as a prominent cryptocurrency hub, driven by its welcoming regulatory policies aimed at attracting more participants to the region. Nevertheless, the JPEX blunder is a huge blow to the local crypto ecosystem.
Local regulators have intensified their actions against the platform, which ceased its operations this week. Notably, the Hong Kong police have arrested six individuals in connection with JPEX.
Among those nabbed is a lawyer turned crypto influencer, Joseph Lam Chok. The authorities reportedly confiscated evidence, including a laptop and a sum of cash. Another influencer, Chan Wing-yee, was also detained under suspicion of involvement in a conspiracy to commit fraud.
In a statement, Hong Kong Chief Executive John Lee was quoted as saying,
“This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed. The SFC will monitor the situation very closely and ensure that investors are sufficiently protected.”
The arrest of the individuals followed an announcement by the SFC last week, declaring that JPEX was operating without a license and lacked the authority to conduct crypto trading activities within the city.
The regulatory agency revealed that some investors had reported difficulties in withdrawing their virtual assets from JPEX accounts, and some had noticed discrepancies in their account balances.
JPEX made an official statement on Monday, highlighting its decision to suspend trading activities on its platform, like ongoing negotiations with third-party market makers to address liquidity issues. JPEX had previously voiced concerns about “unfair treatment by relevant institutions” in Hong Kong and accused an unidentified third-party market maker of deliberately freezing funds.
As of Tuesday, the police disclosed that they had frozen bank accounts totaling 15 million Hong Kong dollars (worth around $1 million) and seized three properties valued at 44 million Hong Kong Dollars (worth around $5.6 million). They also reported receiving 1,641 complaints related to JPEX, involving a total of 1.2 billion Hong Kong Dollars (worth around $153 million).