Former lawyer and crypto influencer Joseph Lam has been apprehended by the Hong Kong Police for allegedly associating with troubled cryptocurrency exchange JPEX. A local media outlet reported, citing sources familiar with the case, that the police arrested Lam on Monday, September 18.
JPEX And Influencers Falsely Promoted Unregistered Products
Joseph Lam’s arrest comes amid a heated investigation by Hong Kong authorities into the JPEX exchange following its liquidity crunch. According to reports, the police raided his office and confiscated some boxes containing evidence of Liam’s connection to JPEX.
Meanwhile, on Saturday, the influencer told his over 190,000 Instagram followers that he visited the police on Friday. He said he offered the police information about the crypto platform. Also, he urged those affected by JPEX’s liquidity crunch to call a police hotline set up for reporting losses.
The ongoing police investigation into crypto exchange followed a warning from Hong Kong’s Securities and Futures Commission (SFC). On September 13, the SFC said the exchange illegally promoted its products and services to the public using social media influencers.
Furthermore, the regulator alleged that JPEX and its influencers falsely presented the platform as a duly registered exchange in Hong Kong. In addition, the regulator warned investors to stay cautious about investment opportunities that appear misleading or too appealing.
JPEX Halts Operations Citing Liquidity Challenges
JPEX has suspended trading activities on its platform following the SFC’s investigation. In a September 17 blog, it announced plans to halt some operations, citing liquidity issues with third-party market makers.
It stated:
Recently, due to the unfair treatment by relevant institutions in Hong Kong toward JPEX, […], and a series of negative news, our partnered third-party market makers have maliciously frozen funds.
According to the exchange, the market makers restricted its liquidity and significantly increased operating costs, resulting in operational challenges. Therefore, it increased withdrawal fees with plans to readjust when things return to normal.
Furthermore, it disclosed plans to delist all transactions from its Earn Trading interface by Monday, September 18. As a result, users can no longer place new Earn orders. However, it will allow existing Earn orders to continue, but can only receive rewards until the end date.
Meanwhile, on Saturday, Hong Kong police said it received over 83 complaints about JPEX and assets worth $4.3 million. Some users complained about difficulties withdrawing funds, with large sums held back on JPEX as processing fees.
According to the report, the police commissioner, Raymond Siu Chak-yee, said the SFC filed a report over suspected fraud. He added that the Commercial Crime Bureau was investigating the matter, and the police encouraged other victims to lodge their complaints.