Cryptocurrency Exchange JPEX Entangled in Unlicensed Operations and Fraud Scandal

Cryptocurrency Exchange JPEX Entangled in Unlicensed Operations and Fraud Scandal

Hong Kong’s JPEX Faces Legal Scrutiny

Taiwan’s Financial Supervisory Commission has confirmed its receipt of public complaints against JPEX, a Hong Kong-based cryptocurrency exchange backed by Taiwanese artist Chen Lingjiu. The complaints allege that the exchange has been conducting unlicensed solicitation within Taiwan, leading the Commission to forward the case to the prosecutor’s office for further investigation.

However, the Commission admits difficulty in estimating the number of affected investors due to JPEX’s illegal operations in the country. Complaints from the public usually trigger the collection of evidence and subsequent reporting to the prosecutor’s office, as is the case with JPEX.

Foreign Virtual Trading Platforms and Taiwanese Law

The Commission clarified that under the Company Law, a foreign virtual trading platform operating in Taiwan without a registered branch office is deemed illegal and carries criminal liability. Depending on the platform’s involvement in certain types of businesses, including virtual asset exchange and transfer, virtual asset custody, and participation in virtual asset offering or sale, the platform could face further penalties. These penalties can reach a maximum fine of NT$10 million under the Money Laundering Control Act.

The JPEX Scandal: A Detailed Timeline

The scandal first came to light on September 13 when the Hong Kong Securities and Futures Commission called out JPEX for operating without a license. Since then, over 2,300 victims have reported losses amounting to more than HK$1.4 billion (approximately NT$60 billion). The artist Chen Lingjiu, who endorsed JPEX, has also reported a loss of 15% of his assets, adding more fuel to the fire.

Risks of Investing in Foreign Virtual Asset Trading Platforms

The Commission strongly advises caution when investing in foreign virtual asset trading platforms. As these platforms may not have approval from local regulatory bodies, investors should be prepared to bear the risk themselves. Furthermore, due to the overseas nature of these platforms, information about virtual asset trading may often be opaque, with high price volatility. In the event of a dispute, the rights of investors may not be adequately protected.

Urging the Public to Report Illegal Activities

The public is strongly encouraged to report any illegal activities, such as selling financial products domestically or conducting unlicensed financial business. Violations of anti-money laundering regulations for virtual currencies and the illegal provision of virtual asset trading services should also be reported to the Financial Supervisory Commission.