JPEX scandal erodes public trust in cryptocurrencies, sets back Hong Kong’s virtual asset hub ambitions: analysts
- The implosion of JPEX is likely to make the public more cautious about investing in cryptocurrencies, experts say
- Sentiment may improve over the long run, as Hong Kong’s legal clampdown on JPEX shores up trust in licensed platforms
The JPEX scandal, which is suspected to have ensnared at least 2,305 victims involving about HK$1.43 billion (US$182 million) of investments, has dealt a heavy blow to public trust in cryptocurrencies, casting a shadow over Hong Kong’s ambitions to become a global virtual asset hub.
The implosion of JPEX, which could turn out to be the largest financial fraud in the city’s history, has rung alarm bells among local retail investors, creating near-term challenges for virtual asset companies banking on the government’s push to expand the sector, according to industry players and analysts.
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The cryptocurrency scandal gripping Hong Kong
JPEX, established in 2021, has targeted retail investors with large advertisements in the city’s business and transport hubs, claiming to be a licensed cryptocurrency exchange and dangling yields as high as 20 per cent.
A chat group on the messaging app Telegram for people claiming to be JPEX victims has drawn more than 12,600 sign-ups, after the cryptocurrency exchange suspended trading on Monday and put in place high processing fees for fund withdrawals.