Hong Kong police have arrested social media influencer Joseph Lam Chok today (Monday) morning for his involvement with cryptocurrency trading platform JPEX, which is facing allegations of fraud, according to the South China Morning Post.

JPEX Suspends All Trading Activities

The arrest came hours after the troubled exchange confirmed the suspension of trading activities following a probe by Hong Kong’s Securities and Futures Commission (SFC).

“Due to the unfair treatment by relevant institutions in Hong Kong towards JPEX, a cryptocurrency trading platform, and a series of negative news, our partnered third-party market makers have maliciously frozen funds. They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties,” the crypto exchange wrote in a blog post published yesterday (Sunday).

Another FTX?

Hong Kong’s financial markets regulator issued a warning against JPEX last week, highlighting that the exchange falsely claimed to have applied for a license with the regulator. On its website, the exchange claims to be licensed by securities authorities in Australia and has registration with the US Financial Crimes Enforcement Network (FinCEN) as a Money Services Business (MSB). However, the SFC highlighted that these claims are false.

The Hong Kong regulator further said that JPEX promoted “its products and services to the Hong Kong public through social media influencers and key opinion leaders (KOLs) as well as over-the-counter virtual asset money changers (OTC Shops),” adding that it has requested all of them to cease the promotions.

Actions against Influencers

The arrest of Lam came after the Hong Kong police revealed on Saturday that they had received at least 83 complaints related to the exchange involving cryptocurrencies worth about HK$34 million (US$4.3 million).

Hong Kong's Social Media Sensation, Joseph Lam, Arrested in Daring HK$34 Million JPEX Crypto Scandal! pic.twitter.com/zSUlXRZRTM

— Crypto University (@TheCryptoU) September 18, 2023

Lam, a lawyer-turned-influencer, is now being questioned by the Hong Kong police, who also raided his office premises. According to the local publication, the police seized many things in several boxes, along with a plastic bag of banknotes.

Meanwhile, JPEX additionally vacated its Taipei office, and the authorities are questioning local influencers who promoted the exchange, according to a local news outlet. An X.com (formerly Twitter) user further pointed out that JPEX abandoned its booth last week on the second day of the Token2049 conference held in Singapore, following the SFC’s warning.

The Platinum sponsor, JPEX, abandoned their booth at #Token2049 on the second day. 👀

On a side note, their logo looks quite similar to FTX. Is that a sign? 🤔 pic.twitter.com/KZw9o5vNgF

— J O Y (@joyxspacelatte) September 14, 2023

“Due to the third-party market makers restricting our liquidity and to comply with policy guidelines, all transactions on our Earn Trading interface will be delisted on September 18, 2023, at 00:00 (GMT+8),” the troubled exchange added in its blog post. “During this period, our dedicated withdrawal team responsible for handling emergency withdrawal requests will continue to prioritize users’ needs.”