JPEX Scam: Is The Celebrity Effect Behind It All?
The Hong Kong police have temporarily arrested 28 individuals regarding the JPEX case.
With over 2,500 victims involved and an estimated amount of approximately HK$1.5 billion, the HK police have classified it as a cryptocurrency scam.
Do not assume that this scam is unrelated to the general audience, however.
If anything, it is the general audience, the unsuspecting masses, that is the demographic of this scam.
This form of deception is heavily dependent on the “celebrity effect” to infiltrate various platforms, channels, and even different regions for promotion.
Inevitably, this has misled its investors.
Established in 2020, JPEX began placing large-scale advertisements across various districts in Hong Kong in 2021.
Many people, believing in the endorsements or claims of investment by well-known KOLs and celebrities, joined the fray.
The implicated parties are not limited to KOLs in Hong Kong; individuals in Malaysia, Taiwan, and other parts of Southeast Asia have been affected.
Who is Involved?
Joseph Lam (林作), Former Insurance Broker and KOL
The middle one
Lam operated an over-the-counter (OTC) cryptocurrency exchange. He had previously actively promoted the use of JPEX services and became involved in an incident related to it.
Interestingly, Lam had issued a statement to sever ties with JPEX prior.
He clarified once again “The business I am involved in is not related to exchanges. I am unable to locate the owner of that platform.”
Lam was arrested on September 18th and granted bail on the 22nd.
On the same afternoon, he held an emergency press conference to explain his side of the story.
He stated that he would do his best to assist law enforcement agencies and hoped that the matter could be resolved as soon as possible.
HK01’s Youtube channel
Chan Yee (陈怡), Renowned KOL
Chan Yee was also arrested on 19 September.
She is a well-known YouTuber in Hong Kong, and in 2021, she established a cryptocurrency exchange called "CYOTC".
The day before her arrest, she released two consecutive videos, launching into explicit tirades and seemingly insinuating that the Securities and Futures Commission (SFC) is “正貪會” (meaning: corrupt SFC). She pointed out, “SFC is relying solely on bending JPEX, and questioning if it is to protect underlying interests.”
Julian Cheung Chi Lam (张智霖), Renowned Artist
Julian Cheung was the brand ambassador for JPEX in the Hong Kong region and has filmed videos and taken photos for the company.
Following the recent controversy surrounding JPEX, his manager responded to the media by stating that Cheung was not involved in any investments nor did he incur any financial losses.
After completing an advertisement shoot in March of last year, he learned in May that JPEX was "under the supervision of the Securities and Futures Commission."
Consequently, he formally notified JPEX in writing that if the company failed to obtain a licence, they could not use Cheung's image for promotion and reserved the right to take legal action.
Jacquelin Chng Se Min (莊思敏), Hong Kong/Malaysian Artist
It is understood that Jacquelin suffered losses of nearly HKD 500,000 in the JPEX incident.
She returned early from Malaysia to Hong Kong last week to assist in the police investigation.
She mentioned that other matters have been handed over to her lawyer for handling.
Zhu (朱公子), Cryptocurrency Influencer
The right one
After his arrest, his cryptocurrency over-the-counter trading service, "KT Club," was found empty.
Boxes were found piled up outside the Tsim Sha Tsui Mirador Mansion flagship store.
The location of Tsim Sha Tsui Mirador Mansion flagship store
HK01’s Youtube channel
Sheena Leung (湘湘), Crypto Goddess
Reports indicate that among those arrested, one is a 29-year-old female internet celebrity surnamed Leung, known as "湘湘".
She is an employee at the over-the-counter cryptocurrency exchange, Unicoin.
She often shares investment insights on her personal YouTube channel, called "湘湘投資日記" However, now her channel is temporarily unavailable.
Sheena Leung disscused this with Stephen Shiu, senior current affairs commentator on YouTube
Clement Chan Ting Bong (陈定帮), Mystic Scholar
On 22nd September, Clement Chan went to the police headquarters to assist in the investigation of the JPEX case.
Subsequently, he stated that the matter has been handed over to lawyers and he will not be making any further comments.
Nine Chen (陈零九), Taiwanese Spokesperson
As the Taiwanese spokesperson, Nine Chen’s manager had this to say:
"Chen and JPEX concluded their collaboration by the end of July 2023. Relevant materials have been promptly taken down during the grace period."
Chen himself shared a time-limited update expressing his desire to help but being unable to contact relevant individuals from JPEX.
He emphasised his full cooperation with any investigations by relevant authorities.
Hong Kong Should Strengthen Regulation
Due to the significant influence of internet celebrities, Mainland China, South Korea, the United States, and the United Kingdom have all implemented regulations on influencer endorsements in recent years.
Hong Kong is notably lagging behind. This incident highlights the necessity for Hong Kong to enact legislation to regulate influencer endorsement activities in order to safeguard the rights of consumers and investors.
Seeing that Hong Kong is looking to become a crypto hub, it’s likely that this incident will affect its reputation.
It's too early to say if the incident has affected confidence in investing in Hong Kong, however.
The Securities and Futures Commission has indicated that it enhances measures by regularly disclosing the list and progress of trading platforms applying for licences to increase transparency in information dissemination.
At the same time, current legislation will be examined to combat fraud.
Lastly, investors also bear a certain responsibility. Investing in crypto is high-risk.
Investors, retail and institutional, should not rely on internet influencers to make their financial decisions.
Before investing, investors should thoroughly verify whether the trading platform is licenced and conduct proper due diligence.