JPEX attributed its liquidity difficulties to regulatory constraints and external market makers, leading to increased withdrawal fees and the suspension of specific services.
According to various local media reports, Joseph Lam (Lin Zuo), a former lawyer and cryptocurrency influencer, has been arrested by Hong Kong authorities in connection with the JPEX crypto exchange.
Crypto Influencer and His Ties with JPEX
The arrest took place today, with law enforcement officers also conducting a raid on Lam’s office in the city around 11 a.m. local time. During the operation, the officers reportedly seized boxes of potential evidence, including banknotes. When contacted, a Hong Kong police spokesperson declined to provide comments, and as of now, Lam has not responded to requests for comment.
Lam said on Saturday on Instagram, where he has over 190,000 followers, that he went to the police force on Friday to offer relevant information about JPEX. He also urged affected users to call a hotline the police had set up to report losses.
Another unverified report indicates that Lin Zuo proposed “schemes” within a cryptocurrency investment chat group. According to the claims, Lin Zuo purportedly persuaded one of the individuals, Miss Chen, to invest 100,000 Hong Kong dollars ($12,800) in cryptocurrency. Nevertheless, Joseph Lam has not yet responded to confirm or refute these allegations. The report notes:
“He (Lin Zuo) from time to time claimed in the group that people kept looking for him to ‘pay money’, threatened that ‘the amount of money on these two days is five times the usual’.‘”
JPEX Blames Third-Party Market-Makers
JPEX attributed its liquidity difficulties to regulatory constraints and external market makers, leading to increased withdrawal fees and the suspension of specific services. In a statement, JPEX pledged to swiftly restore liquidity from third-party market makers and gradually return withdrawal fees to their standard levels, with exact terms forthcoming following negotiations.
The investigation by the police into JPEX commenced subsequent to a caution from the Securities and Futures Commission. The commission had cautioned that crypto influencers and the trading platform had disseminated “false or deceptive statements on social media”, falsely indicating that JPEX had sought a virtual asset trading license in Hong Kong.
In response to an ongoing liquidity crisis, JPEX announced on Sunday that it has taken measures to address the situation. This includes the suspension of certain operations and increasing withdrawal fees. The exchange attributed the crisis to the alleged malevolent actions of third-party market makers who froze funds.
As of Friday, the Hong Kong police have recorded a total of 83 complaints related to JPEX and virtual assets amounting to approximately HK$34 million ($4.3 million), as reported by SCMP on Saturday.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.