Hong Kong establishes crypto task force amid JPEX scandal

• The primary objective was to strengthen the monitoring and investigation of illicit activities carried out by VATPs.
• The group was established following a meeting between the SFC and the HKPF on 28 September.

In response to the unfolding crypto scandal involving the Dubai-based JPEX exchange, the Hong Kong Police Force (HKPF) and the Securities and Futures Commission (SFC) have joined forces to create a dedicated crypto-focused working group. This move comes on the heels of recent arrests and developments related to JPEX.

The SFC officially announced the formation of this working group on 4 October. This was following a meeting between the SFC and the HKPF on 28 September. The SFC has accused JPEX of operating in the region without a proper license.

Additionally, the SFC alleged that JPEX was promoting its services unlawfully.

Crypto task force takes aim at illicit activities

The primary objective of this newly formed working group is to strengthen the monitoring and investigation of illicit activities carried out by Virtual Asset Trading Platforms (VATPs).

It will focus on information sharing related to suspicious activities. Risk assessment of questionable exchanges will be made and collaborative efforts will be a part in conducting investigations.

Notably, Hong Kong’s regulatory authorities had previously indicated their intention to tighten regulations within the crypto market.

The working group consists of officials from the SFC’s enforcement division. Additionally, personnel from the HKPF from its commercial, cybersecurity, financial intelligence, and investigations bureaus are also part of the team.

Christopher Wilson, the Director of Enforcement at the SFC, expressed the regulator’s commitment to deploying its resources effectively in combating problematic VATPs and safeguarding the interests of investors.

Eve Chung, the Assistant Commissioner of Police (Crime) at the HKPF, emphasized the significance of this collaborative effort. She highlighted the importance of exchanging intelligence and jointly addressing challenges arising from VATPs to ensure the protection of the general public in Hong Kong.

Additionally, the SFC has proactively published a comprehensive list that includes exchanges holding licenses, deemed to have licenses, undergoing closure, or having pending applications. It aims to enhance transparency and oversight in the crypto market.

Furthermore, the SFC has also published a list of “suspicious VATPs” as part of its efforts to enhance regulatory scrutiny.

Hong Kong and Macau authorities have made multiple arrests and asset seizures in the ongoing JPEX crypto exchange fraud case. The scandal has generated over 2,300 complaints from victims, with estimated losses reaching approximately $178 million.