Hong Kong JPEX cryptocurrency scandal is a chance for residents to ‘learn more about fintech, improve vigilance over unlicensed platforms’
- Dora Li, general manager of the Investor and Financial Education Council, says public should verify licences of virtual asset trading platforms before using them
- She warns investors to be weary of schemes promising ‘high return and low risk’, amid fallout from city’s largest alleged financial fraud centred on crypto platform JPEX
Hong Kong’s growing scandal involving cryptocurrency exchange JPEX serves as an opportunity for residents to learn more about fintech and improve their vigilance over unlicensed platforms, according to a top executive at the city’s investor education body.
Dora Li Yuen-chow, general manager of the Investor and Financial Education Council, on Sunday said it would step up its work promoting better knowledge of investments among the public, who should thoroughly research whether virtual asset trading platforms were licensed before using them.
“Investors should take this opportunity to learn more about fintech and related products as the development of virtual assets has just taken off, and there may be more of these products flooding the market,” she said in a televised interview.
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Li said investors generally had strong knowledge of financial management and investments, but their “behaviour and attitude” could sometimes lead to problems.
The council is a public organisation that is committed to promoting investor and financial education. It is a subsidiary of the Securities and Futures Commission (SFC).
“This incident has led to a lot of public discussion and the council would like to take this opportunity to carry out more investor education to let the public understand more about fintech,” Li said, referring to the city’s largest alleged financial fraud centred on accusations against cryptocurrency firm JPEX.
Suspected losses in the case have reached HK$1.5 billion (US$191.9 million), with police having received 2,417 complaints against the trading platform as of Friday.
Last month, the SFC accused JPEX of misleading investors about its licence status and operating with “suspicious features”.
But JPEX fiercely rejected the allegations, and began charging hefty fees for users hoping to withdraw their virtual assets.
Li said Hongkongers should beware of unlicensed cryptocurrency platforms that marketed themselves as “high return and low risk”.
“These fraudulent platforms usually promote high-return, low-risk investments such as those that offer 30 per cent interests or those that are guaranteed to have income and no losses,” she said.
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“They may promote these products through influencers and tell investors that they will lose out if they do not invest in them. The most important thing is not to follow the crowd and understand that these kinds of products are too good to be true.”
Besides sprinkling advertisements in MTR stations and on buses, billboards and in the media, JPEX had also recruited a number of celebrities, influencers and over-the-counter cryptocurrency changer stores to promote the platform.
Li said investors should not be deceived by large-scale marketing campaigns, warning that it was not necessary for advertisement agencies to verify the legal status of their clients.
She said the JPEX name might have also been misleading due to its similarity to other legitimate or well-known trading platforms, urging investors to verify claims over licensing, including those related to overseas authorities.
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“Even if it is licensed, we have to realise that the laws and regulations on virtual assets vary from country to country,” she said.
Li said people who fell victim to the alleged scam might not be able to retrieve their assets as JPEX was not regulated by the government.
The SFC earlier published a list of companies that had applied for licences to offer cryptocurrency trading services to retailers, but Li said it was only for reference.
The public should only commit to those that have been licensed and invest in products that are suitable for them, she added.
Last week, former SFC chairman Anthony Neoh also argued the scandal had exposed the need to step up investor education, saying residents had been lured by JPEX’s “impossible” promise of gaining an annual return as high as 20 per cent.
