Hong Kong authorities have filed charges against sixteen individuals, including influencer and former lawyer Joseph Lam Chok, for their alleged roles in the JPEX cryptocurrency scandal. The case, which defrauded more than 2,700 investors of about US$205 million, is one of the largest financial frauds in Hong Kong’s history. It has intensified debate over the city’s regulatory framework for virtual assets and the responsibilities of public figures promoting them.
Anti-money laundering law applied
For the first time, Hong Kong has invoked its Anti-Money Laundering and Counter-Terrorist Financing Ordinance in a cryptocurrency-related prosecution. Those charged face accusations of fraud, conspiracy to defraud, and money laundering. Police said JPEX operated without a trading license and promised investors unrealistic returns, using aggressive online marketing campaigns and partnerships with over-the-counter (OTC) crypto shops.
The investigation revealed that social media influencers played a key role in promoting JPEX as a safe, government-approved platform. Many victims were misled by claims that the exchange was properly licensed and risk-free. According to the Securities and Futures Commission (SFC), these promotions continued even after official warnings that JPEX was operating illegally.
Legal fallout and criticism of Lam’s conduct
Lam was among several influencers arrested in September 2023, following a police probe triggered by investor complaints of frozen withdrawals. After being released on bail, Lam told reporters he had “slept well,” a remark widely criticized by legal experts. Joshua Chu, co-chair of the Hong Kong Web3 Association, described Lam’s attitude as lacking empathy and said his legal team’s silence and inaction had weakened his defense.
Continuing investigation and government response
Since the investigation began, authorities have made more than eighty arrests and seized around US$28 million in assets, including digital currencies. Three suspected ringleaders remain at large, with Interpol red notices issued for their capture. Officials said further arrests are possible as they trace complex fund flows.
To prevent similar incidents, the Hong Kong government plans to strengthen licensing requirements for crypto exchanges and enhance public awareness of digital asset risks, reinforcing its commitment to investor protection and financial transparency.
