The JPEX scandal, regarded as potentially the largest financial fraud in Hong Kong's history, has not only harmed thousands of victims but has dealt a significant blow to retail trust in cryptocurrencies in the jurisdiction.
Analysts and industry experts have voiced concern that the fallout from the JPEX debacle will present significant challenges for virtual asset companies and hinder the government's efforts to expand the sector.
“At a time when people still don’t completely understand what Web3 is, the JPEX case has created a negative impression for people in Hong Kong on digital assets and the broader Web3 industry,” Cyrus Ip, a crypto venture investor and chief business officer at artificial intelligence start-up DreamWld Technology, told the South China Morning Post.
JPEX, established in 2021, targeted retail investors through extensive advertising campaigns in prominent business and transportation hubs.
The exchange claimed to be a licensed cryptocurrency exchange and enticed investors with promises of high returns, reaching up to 20 percent.
However, last week, the company raised withdrawal fees and paused the operations of the Earn program on its platform citing an ongoing liquidity crisis.
At the time, some users have claimed that the platform is charging a 999 USDT fee for a withdrawal, with the withdrawal maximum set at 1,000 USDT.
Following the suspension, a Telegram chat group for self-proclaimed JPEX victims gained over 12,600 members.
It is suspected that the exchange has left at least 2,305 victims involving about HK$1.43 billion (US$182 million) of investments.
“I think this scandal will have a pretty sizeable negative impact on retail sentiment, given its significant local presence and the variousRead more on cryptonews.com