Taiwan’s Bureau of Investigation has referred popular Taiwanese singer Nine Chen to the prosecutor’s office in Taipei on charges of gross fraud and violating banking laws for her alleged involvement in a fraud scheme linked to Hong Kong’s JPEX exchange, according to local media reports.

Following an investigation, Chen, who reportedly received 320,000 USDT last year to act as JPEX’s brand ambassador, was found to be involved in JPEX-related fraudulent activities in Taiwan, local newspaper United Daily News reported on Wednesday. Prosecutors have not yet filed formal charges against Chen.

The singer’s investigation comes after Hong Kong authorities cracked down on JPEX’s local operations last year and arrested dozens of suspects in a HK$1.6 billion ($204.9 million) fraud case. Many investors in Taiwan were also affected.

In October, prosecutors called Chen as a witness but later listed him as a defendant. Chen told local media at the time that his investments through JPEX exceeded his approval revenues and his assets lost about 15% of their value.

Taiwan has been requiring virtual asset service providers to comply with anti-money laundering laws since the Financial Supervisory Commission (FSC) enacted these rules in July 2021. However, JPEX has not registered with the FSC for AML compliance.

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According to a report from the South China Morning Post on September 23, the police have received more than 2,265 complaints from victims of the exchange, estimating the total financial loss to be around $178 million (1.4 billion Hong Kong dollars).

The complaints seem to be related to difficulties in withdrawing cryptocurrency from the platform. On September 15, the JPEX exchange raised its withdrawal fees to 999 Tether. Among those allegedly taken into custody for questioning is crypto influencer Joseph Lam Chok, who has been attempting to distance himself from the exchange publicly.

Additionally, police have arrested three employees of the JPEX Technical Support Company and two YouTubers, ChanWing-yee and Chu Ka-fai, who have a combined following of more than 200,000, all in connection with the scandal. Others sought or taken in for questioning include the company’s sole director, Kwok Ho-lun, a restaurant director, and three celebrities who had reportedly promoted JPEX in some form in the past. However, Hong Kong authorities have stated that the leaders of the operation remain at large. The police have indicated that the investigation is ongoing and further arrests are likely in the near future.

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Local police have also sought assistance from Interpol and other international law enforcement agencies after identifying suspicious crypto transfers originating from the JPEX exchange. They have also requested that local telecommunications providers block access to the exchange’s website.

They Arrested at Token2049!

During the Token2049 conference in Singapore on September 13, the JPEX team allegedly abandoned their corporate booth after Hong Kong police arrested six employees on charges of fraud for operating an unlicensed crypto exchange. The JPEX scandal first came to light on September 13 when Hong Kong’s financial regulator informed the public that it had received over 1,000 complaints about the unregistered crypto exchange platform, with claims of losses totaling over $128 million (1 billion HK dollars). Subsequently, the exchange closed some of its interest-bearing products and raised its withdrawal fees to 999 USDT, attributing these actions to “maliciously” freezing liquidity by third-party market makers.

At the time, JPEX claimed to have attempted to register with relevant authorities and cited “unfair” treatment from regulatory bodies, including the Securities and Futures Commission (SFC). In a statement on September 20, the SFC revealed that JPEX had been operating without a license for virtual asset trading.

According to its official website, JPEX purported to be headquartered in Dubai and claimed to be licensed for crypto trading activities in the United States, Canada, and Australia. Founded in 2020, JPEX asserted that it oversaw assets totaling approximately $2 billion and aimed to be among the world’s top five crypto exchanges.

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Hong Kong announce that it will disclose a list of companies applying for newly launched retail crypto trading license following the JPEX controversy. The Securities and Futures Commission (SFC) stated in their announcement that they will publish a list of licensed virtual asset trading platforms, a list of closed VATPs, and a list of VATPs considered licensed after June 1, 2024.

The SFC stated in their announcement, “To help the public more easily identify and increase awareness of suspicious VATPs operating in Hong Kong, the SFC will develop and publish a specific list of suspicious VATPs that is easily accessible and featured on the SFC’s website.”

SFC Licensing Director and Fintech Unit Head Elizabeth Wong stated in a press conference that publishing the list of applicants allows the public to check whether platforms have made false declarations related to license applications. She also said, ‘According to local media RTHK, there are currently four companies in the preliminary process for applying for a license.

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Raid!

This move by the SFC comes after the regulator warned on September 13 that the crypto phenomenon and trading platform JPEX made “false or misleading statements on social media” by stating that the company had applied for a virtual asset trading license in Hong Kong.

Last week, 20 different places were raided by the Hong Kong police and 11 people were detained from various locations.

As a response to the police intervention, JPEX officials stated they had received “unfair treatment”. In another announcement made by the exchange, they called for their users in Hong Kong to “temporarily stop depositing new assets and crypto assets to the platform”.

Operations manager of crypto platform VDX, Donald Day,

said, “It’s very encouraging that Hong Kong is ready to impose sanctions against unlicensed and criminal activities. It’s also very positive to see that there are people who often force ignorant investors to trade on JPEX, also known as ‘KOL’.

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