JPEX Incident Update: Multiple Arrests, Involving Billions of Funds.

Following the warning issued by the Hong Kong Securities and Futures Commission regarding the unregulated virtual asset trading platform JPEX, as the events have unfolded, the police have arrested internet celebrities Lam and Chen Yi on suspicion of their involvement in the case named by the Commission. It has been reported that the police had also identified another entertainer, but they were unable to make an arrest as the individual was not in Hong Kong.

As of the latest update, the police have arrested a total of 8 individuals in connection with the JPEX case. The police have stated that they have received reports from a total of 1,408 individuals related to the case, involving an estimated amount of approximately 1.2 billion HKD.

JPEX's latest announcement states that it has experienced unfair treatment in Hong Kong and is determined to continue its operations. JPEX has indicated that the Hong Kong Securities and Futures Commission had previously sent letters to its partners, requesting the termination of their cooperation with JPEX. Additionally, following the release of a statement by the Hong Kong Securities and Futures Commission regarding JPEX, third-party market makers associated with the platform maliciously locked funds.

However, prior to the Hong Kong Securities and Futures Commission's announcement that JPEX is an unregulated virtual asset trading platform, there were users on WikiBit who claimed that the exchange had misappropriated user assets.

Tingqian Chen, a lawyer specializing in financial market regulation and virtual assets in Hong Kong, mentioned that Hong Kong users of JPEX might encounter certain difficulties if they consider pursuing civil claims at this stage. The current challenge lies in not knowing which legal entity holds the client assets for JPEX, as well as not being aware of the registration location of this legal entity.

Furthermore, Chen noted that in the event of JPEX's closure, the process would resemble the liquidation procedure seen in the case of the unlicensed virtual asset trading platform Gatecoin, previously registered in Hong Kong. During this process, platform assets must be distributed in an orderly manner to creditors, and the type of creditor rights held by users largely depends on the terms between the platform and its users. As JPEX is not licensed in Hong Kong, if the terms do not explicitly establish a trust relationship between the exchange and the users, user deposits held by the exchange are likely to be treated as the exchange's assets during the liquidation process. This means that users would be unsecured creditors and would have a fifth priority in the asset distribution order during liquidation, following secured creditors, liquidation expenses, preferential payments, and floating charge holders.