On November 5, 2025, the JPEX collapse case reached a significant milestone with its first formal prosecution. This action was initiated by the Commercial Crime Bureau (CCB) of the Hong Kong Police Force, targeting 13 individuals. The group includes six core members of JPEX, alongside seven over-the-counter (OTC) operators and key opinion leaders (KOLs).
The commencement of this prosecution signifies the beginning of criminal proceedings for the JPEX case. CCB Chief Superintendent Ernest Wong announced at a press conference that this marks the initial phase of prosecution, with charges encompassing conspiracy to defraud, money laundering, obstruction of justice, and inducing others to invest in virtual assets through fraudulent means or with reckless disregard for the consequences.
More than two years have passed since the events of 2023, and for many users, the details of the JPEX incident may have faded. Newer users might not even be familiar with it. The JPEX case, which unfolded in 2023, stands as the largest virtual asset fraud case in Hong Kong's history. It involved over HK$1.6 billion and resulted in losses for approximately 2,700 investors. The platform operated without a license, lured users with promises of high returns, and ultimately collapsed in September 2023.
It is noteworthy that crypto-financial fraud exceeding USD 100 million is relatively rare in Asia. The JPEX case was more than a simple virtual asset fraud; its scale was unprecedented, the individuals involved were diverse, and it featured a massive cross-border funding chain. Crucially, it exposed the deep-seated issues that emerged during a regulatory transition period, including unlicensed operations, misleading regulatory claims, high-return schemes, and the chaotic promotion by KOLs. JPEX effectively embodied nearly every possible type of crypto-financial fraud.
On a more profound level, the case highlighted the systemic risks that had accumulated due to the persistent conflict between the drive for "innovation" and the necessity of "regulation."
With two years of investigation, 80 arrests, 2,700 victims, losses exceeding HK$1.6 billion, and the masterminds placed on Interpol's Red Notice list, the JPEX case has transcended its description as merely "Hong Kong's biggest crypto collapse." It is a case of such significance that it is poised to be recorded in the history of Hong Kong's virtual asset regulation.
A Full Review of the JPEX Case: What Exactly Happened Back Then?
JPEX, a crypto exchange founded in 2020, was headquartered in Dubai. It marketed itself as a "global digital asset trading platform" and a "Japanese cryptocurrency exchange," and it falsely claimed to hold financial licenses from the United States, Canada, Australia, and Dubai's Virtual Assets Regulatory Authority (VARA).
The situation took a dramatic turn when JPEX employed a classic tactic of "concept substitution." Investigations by the Securities and Futures Commission (SFC) revealed that the "licenses" it possessed were only for foreign exchange services and did not permit virtual asset trading. Furthermore, both Japan's Financial Services Agency and Dubai's VARA clarified that JPEX was not authorized to operate in their jurisdictions.
Public opinion can be a double-edged sword, and JPEX's aggressive marketing strategies quickly led to backlash. The platform launched extensive advertising campaigns across Hong Kong, appearing in MTR stations, on bus bodies, and on shopping mall exteriors. These were complemented by promotions from OTC shops and social media KOLs, which garnered significant initial attention. Given the regulatory environment of the time, such overt advertising was unusual. This extensive promotional effort is also a key reason why seven OTC operators and KOLs are among the defendants.
June 2023
The Hong Kong government introduced the Virtual Asset Trading Platform (VATP) licensing regime. This new framework mandated that all platforms must obtain approval from the Securities and Futures Commission (SFC) before they could offer services to retail investors. JPEX, however, failed to apply for a license and continued its operations without authorization, effectively planting the seeds for its eventual collapse.
Early July 2023
Users in mainland China began encountering difficulties when attempting to withdraw funds. Initially, these issues were dismissed as isolated incidents or regional limitations. However, JPEX's subsequent actions ignited widespread public outcry as rumors of the platform's impending collapse began to circulate.
July 18, 2023
A mainland user, identified only as "Yu," who had experienced withdrawal problems, was invited by JPEX to "resolve the issue in person" at a Hong Kong OTC shop. Upon arriving in Hong Kong, he was ambushed and assaulted by unidentified individuals near the intersection of San Wan Road and Chok Yuen Street in Sheung Shui, close to Cambridge Plaza. He sustained abrasions to his forehead and nose. Subsequent police investigations and interrogations revealed that the assailants were executives from JPEX's investment company.
The act of luring and assaulting retail investors seeking to protect their rights was an unprecedented and egregious act in the history of crypto exchanges. This incident could no longer be contained. News of the assault spread rapidly, and on the popular Hong Kong forum LIHKG, posts from mainland users detailing "failed withdrawals" began to appear. These posts claimed that the platform lured victims to Hong Kong to "resolve fund issues" and then arranged for them to be ambushed.
One might have expected JPEX to cease its operations or lie low after such an incident. However, despite warnings from the SFC regarding false statements and allegations of illegal assault, the platform's promotional activities continued unabated.
September 13, 2023
The Hong Kong SFC issued a public warning specifically targeting JPEX, titled "Warning Statement on Unregulated Virtual Asset Trading Platform." The key points of this statement included:
- JPEX was operating without a license, in violation of the VATP licensing regime that became effective on June 1.
- JPEX had falsely claimed to hold financial licenses from the U.S., Canada, Australia, and Dubai VARA, using social media influencers, KOLs (including promotional posts on Instagram), and OTC shops to disseminate these claims.
- JPEX had been on the SFC's Alert List since July 8, 2022. Its products were suspected of involving "deposit/yield" arrangements and illegal fundraising, and numerous retail investors had lodged complaints about their inability to withdraw funds or sustain losses.
- The SFC demanded that all KOLs and OTC shops immediately cease promoting JPEX and its associated services and products.
September 13, 2023
Following this direct public warning from the SFC, it was anticipated that JPEX would implement corrective measures. However, JPEX's subsequent actions proved to be even more perplexing. Merely hours after the SFC statement was released, JPEX issued a swift response on its website and blog. The platform asserted that the SFC's actions constituted "unfair suppression by the Securities and Futures Commission, forcing us to consider withdrawing our license application in Hong Kong and correspondingly adjusting our future policy development. The SFC should take full responsibility for damaging the prospects of cryptocurrency development in Hong Kong."
In a blog post, JPEX claimed it had publicly announced intentions to apply for a crypto trading license in Hong Kong as early as February 2023 and considered Hong Kong a vital market. However, due to the SFC statement "conflicting with Web3 policies," the platform was contemplating withdrawing its license application and revising its regional strategy.
What appeared to be an accusation against Hong Kong authorities for their perceived inaction and unfair treatment paradoxically served as an admission that the platform had not secured a license. This revelation significantly intensified investor panic. The number of complaints escalated from several hundred cases prior to the statement to over 1,600 cases afterward. Many users flocked to OTC shops seeking assistance, making the platform's liquidity crisis visibly apparent.
Whether a bank or an exchange, the repercussions of a liquidity crisis are invariably catastrophic. For instance, in the case of FTX, the exhaustion of liquidity was the primary factor leading to its bankruptcy.
September 17, 2023
Just four days later, JPEX released another announcement on its official blog, reiterating that "unfair treatment" by Hong Kong regulatory authorities had subjected JPEX to massive negative press, which in turn triggered the liquidity crisis. The announcement also alleged that its third-party market makers had "maliciously frozen" platform funds, further exacerbating the crisis.
JPEX emphasized that the issues were not inherent to the platform itself but were caused by external factors. It pledged to restore liquidity and gradually adjust fees. The announcement also confirmed that the Earn service would be completely suspended for trading on September 18, preventing users from placing new orders. Concurrently, JPEX dramatically increased withdrawal fees for USDT from the original 10 USDT to 999 USDT. Given that the maximum withdrawal limit per transaction on JPEX was only 1,000 USDT, this meant users could effectively withdraw only 1 USDT, effectively "freezing user assets."
Although JPEX explained this adjustment as necessary to "respond to business changes," the absence of a recovery timeline ignited maximum panic within the community and among users. Rumors of an impending "rug pull" intensified. As of September 18, the number of police reports had reached 1,641 cases, with reported losses amounting to approximately HK$1.2 billion.
September 18, 2023
The Hong Kong Police CCB initiated a surprise operation, codenamed "Operation Iron Gate." This operation involved raiding 20 locations and led to the arrest of the first group of 8 suspects. Cash, computers, and documents were seized at the scene. The swiftness of the police action was exceptionally rapid and rare within the history of the crypto industry.
October 2023
The number of arrests in the JPEX case climbed to 28. Among those arrested was 28-year-old KOL Henry Choi Hiu-tung, who is also the founder of Hong Coin.
November 5, 2025
This brings us back to the report at the beginning of this article: two years after the initial events, the Hong Kong Police CCB officially prosecuted 16 individuals.
Why Was JPEX Able to Expand So Rapidly in Hong Kong After the Regulatory Upgrade?
Many are puzzled by how an exchange with "no license, no transparency, and no compliance" could achieve such rapid growth. In reality, JPEX's ascent followed a well-established pattern seen in Ponzi schemes and exchange scams across Asia over the past decade: promises of high returns, fabricated licenses, hype generated by KOLs, and aggressive offline advertising. However, what truly fueled its explosive growth in Hong Kong was its exploitation of the gap between regulatory system upgrades and public awareness.
1. Hong Kong was in a confusing “policy window period” for Web3
Beginning in 2023, Hong Kong began promoting virtual asset policies at a strategic level. This included:
- •Public endorsement of Web3 initiatives by government officials.
- •The official implementation of the Virtual Asset Trading Platform (VATP) licensing regime.
- •A rapid influx of overseas platforms and capital into the region.
- •Hong Kong's stated ambition to become a leading virtual asset hub in Asia.
Under this strong political and policy momentum, the prevailing sentiment of "Hong Kong welcomes crypto assets" overshadowed the critical details of regulatory compliance.
Ordinary investors mistakenly believed: "Since Hong Kong supports Web3, the platforms operating here must be safe."
However, the reality was quite different: the summer of 2023 represented the most chaotic period in terms of regulation, providing an opportune environment for platforms to "fish in muddy waters."
The temporal gap between policy announcements and the actual enforcement of regulations was precisely the loophole that JPEX skillfully exploited.
2. Massive advertising created a “compliance illusion”
JPEX's most significant achievement was not in its technology but in its advertising. The platform blanketed the city with advertisements in MTR stations, the airport, on buses, and on the exteriors of shopping malls. As previously noted, such overt advertising was unprecedented in the crypto industry, creating the impression of JPEX as:
“A large platform with significant strength, a solid background, and the confidence to advertise publicly.”
The psychological impact of advertising is profound: genuine scams often do not operate in the shadows; they frequently position themselves in the most visible locations.
3. Fake overseas licenses + KOL endorsements formed a “trust closed loop”
The reason users were convinced of JPEX's legitimacy stemmed from the platform's construction of a fabricated compliance narrative:
- •Claims of being licensed in multiple countries.
- •The use of regulator logos to imply endorsement.
- •KOLs providing assurances such as, "these licenses have been checked; it's very safe."
- •OTC shop staff reassuring retail investors that "Hong Kong's regulation is strict, so JPEX must be fine."
Retail investors believed they had conducted their "due diligence," but in reality, all the information provided was fabricated.
JPEX's manipulation strategy was not sophisticated; it precisely targeted human psychology: Compliance illusion + KOL-generated safety = No need for independent thought.
4. High returns created irresistible incentive traps
JPEX's primary draw was its Earn product, which promised attractive annualized returns:
- •BTC: 20%
- •ETH: 21%
- •USDT: 19%
These high promised returns attracted a substantial number of investors. By leveraging OTC shops and social media KOLs for promotion, the platform cultivated an image of "low risk, high return."
Where Will Hong Kong’s Virtual Asset Market Go After JPEX?
The impact of the JPEX case is significant, and a short-term tightening of regulations is virtually guaranteed. Observing Hong Kong's crypto policy reveals that while the policy framework is in place, the approval process remains extremely strict, with only a limited number of institutions successfully obtaining licenses.
It is evident that following the JPEX incident, Hong Kong will not permit a recurrence of such events. Licensed platforms will become the sole legitimate entry point for virtual asset services. While this will contribute to a healthier industry, it will also lead to intensified competition.
