Hong Kong’s Largest Crypto Collapse: A Comprehensive Analysis of the JPEX Meltdown and Its Regulatory Aftershocks

[SuperEx_Media ✔️]

#HongKong #JPEX

According to reports, on November 5, 2025, the JPEX collapse case entered its first formal prosecution. This prosecution was initiated by the Commercial Crime Bureau (CCB) of the Hong Kong Police Force, involving as many as 13 individuals, including 6 core members of JPEX, as well as 7 OTC operators and KOLs.

The successful commencement of this prosecution also marks the beginning of the criminal proceedings in the JPEX case. CCB Chief Superintendent Ernest Wong stated at the press conference that this is the first round of prosecution in the JPEX case, and the charges mainly involve conspiracy to defraud, money laundering, obstruction of justice, and inducing others to invest in virtual assets through fraudulent means or with reckless disregard for the consequences.

With a time gap of more than two years, many users have already forgotten what exactly happened with JPEX, and some new users have never even heard of it. The JPEX case occurred in 2023 and is the largest virtual asset fraud case in Hong Kong’s history, involving more than HK$1.6 billion and causing 2,700 investors to suffer losses. The platform operated without a license, attracted users with false promises of high returns, and eventually collapsed in September 2023.

However, to be honest, crypto-financial fraud involving more than USD 100 million is indeed rare in Asia. Moreover, JPEX was not a simple “virtual asset fraud case” — its scale was unprecedented, the people involved were complex, and it had a massive cross-border funding chain. More importantly, it tore open the deepest shadow hidden during the regulatory transition period: unlicensed operations, fake regulatory narratives, high-return traps, KOL promotion chaos. One could say JPEX committed nearly every type of crypto-financial fraud possible.

At a deeper level, the case also exposed the systemic risks accumulated due to the long-standing conflict between “innovation” and “regulation.”

With two years of investigation, 80 arrests, 2,700 victims, losses exceeding HK$1.6 billion, and the masterminds placed on Interpol’s Red Notice list, the JPEX case is no longer merely “Hong Kong’s biggest crypto collapse” — it is a case significant enough to be written into the history of Hong Kong’s virtual asset regulation.

A Full Review of the JPEX Case: What Exactly Happened Back Then?

JPEX was a crypto exchange founded in 2020, headquartered in Dubai. It promoted itself as a “global digital asset trading platform” and a “Japanese cryptocurrency exchange,” and claimed to hold financial licenses from the United States, Canada, Australia, and Dubai VARA.

Then came the dramatic twist: JPEX pulled a classic “concept substitution.” According to investigations by the SFC, these “licenses” were only for foreign exchange services and could not support virtual asset trading. As for the so-called “Japanese cryptocurrency exchange,” both Japan’s Financial Services Agency and Dubai’s VARA clarified that JPEX was not authorized to operate.

Public opinion is always two-sided, like the sword of Damocles hanging overhead — if mishandled, backlash follows instantly. JPEX launched massive advertising campaigns in Hong Kong (such as in MTR stations, on bus bodies, and on shopping mall exterior walls), combined with promotion from OTC shops and social media KOLs, gaining significant initial attention. After all, under the regulatory environment of two or three years ago, such overt advertising was extremely rare. Of course, this is also why 7 OTC operators and KOLs were among the defendants.

June 2023

The Hong Kong government launched the Virtual Asset Trading Platform (VATP) licensing regime, requiring all platforms to obtain approval from the Securities and Futures Commission (SFC) before they could provide services to retail investors. JPEX, however, did not apply for a license and continued operating without approval — planting the “bomb” for the coming collapse.

Early July 2023

Users in mainland China began experiencing difficulties withdrawing funds. At first, people assumed it was an isolated issue or a regional limitation. But JPEX’s next moves instantly triggered public uproar, as rumors of the JPEX collapse began to spread.

July 18, 2023

A mainland user surnamed “Yu,” having encountered withdrawal problems, was invited by JPEX to “resolve the issue in person” at a Hong Kong OTC shop. After entering Hong Kong, he was ambushed and beaten by unidentified individuals near the intersection of San Wan Road and Chok Yuen Street in Sheung Shui, close to Cambridge Plaza. His forehead and nose suffered abrasions. After police arrests and questioning, it was revealed that the assailants were executives from JPEX’s investment company.

The behavior of luring and assaulting retail investors who sought to defend their rights was unprecedented in the entire history of crypto exchanges and was extremely egregious in nature. This incident could no longer be covered up. The news spread rapidly, and on the well-known Hong Kong forum LIHKG, posts began circulating from mainland users complaining about “failed withdrawals,” claiming the platform lured victims into coming to Hong Kong to “resolve fund issues” and then arranged to have them ambushed.

Originally, one would think that after such an incident, JPEX would lay low. Unexpectedly, despite being warned by the SFC for false statements and alleged illegal assault, the promotional activities continued.

September 13, 2023

The Hong Kong SFC issued a public warning targeted at JPEX, titled “Warning Statement on Unregulated Virtual Asset Trading Platform.” The core contents of this statement were as follows:

1. JPEX was operating without a license, violating the VATP licensing regime that came into effect on June 1.
2. JPEX used social media influencers and KOLs (such as promotional posts on Instagram) as well as OTC shops to falsely claim it held financial licenses from the U.S., Canada, Australia, and Dubai VARA.
3. JPEX had already been placed on the SFC’s Alert List as early as July 8, 2022. Its products were suspected of “deposit/yield” arrangements, illegal fundraising, and many retail investors had filed complaints about being unable to withdraw funds or sustaining losses.
4. The SFC required all KOLs and OTC shops to immediately stop promoting JPEX and its related services and products.

September 13, 2023

After such a direct public warning from the SFC, one would expect JPEX to make some rectifications. However, JPEX’s next actions became even more baffling. Just hours after the statement was published, JPEX quickly responded on its website and blog, claiming that the SFC’s actions were “unfair suppression by the Securities and Futures Commission, forcing us to consider withdrawing our license application in Hong Kong and correspondingly adjusting our future policy development. The SFC should take full responsibility for damaging the prospects of cryptocurrency development in Hong Kong.”

In a blog post, JPEX claimed it had publicly announced plans to apply for a crypto trading license in Hong Kong as early as February 2023 and considered Hong Kong a key market, but due to the SFC statement “conflicting with Web3 policies,” it was considering withdrawing its license application and adjusting its regional strategy.

What looked like an accusation against Hong Kong authorities for inaction and unfair treatment unexpectedly became an admission that the platform had not obtained a license — directly intensifying investor panic. Complaints surged from several hundred cases before the statement to more than 1,600 cases afterward. Many users rushed to OTC shops seeking help, making the platform’s liquidity crisis publicly visible.

Whether it is a bank or an exchange, the consequences of a liquidity crisis are catastrophic. For example, in the case of FTX, liquidity exhaustion was the primary driver of its bankruptcy.

September 17, 2023

Only four days later, JPEX released another announcement on its official blog, once again emphasizing that “unfair treatment” by Hong Kong regulatory authorities caused JPEX to suffer massive negative press, which triggered the liquidity crisis. The announcement also mentioned that its third-party market makers had “maliciously frozen” platform funds, further exacerbating the crisis.

JPEX stressed that this was not a problem of the platform itself but was caused by external factors. It promised to restore liquidity and gradually adjust fees. The announcement also confirmed that the Earn service would be fully suspended for trading on September 18, and users would be unable to place new orders. Meanwhile, JPEX raised withdrawal fees for USDT from the original 10 USDT to 999 USDT. Considering that the maximum withdrawal limit per transaction on JPEX was only 1,000 USDT, users could effectively withdraw only 1 USDT — essentially “freezing user assets.”

Although JPEX explained that this adjustment was necessary to “respond to business changes,” the absence of a recovery timeline triggered maximum panic among the community and users. Rumors of an impending “rug pull” intensified. As of September 18, the number of police reports reached 1,641 cases, involving approximately HK$1.2 billion in losses.

September 18, 2023

The Hong Kong Police CCB launched a surprise operation codenamed “Operation Iron Gate,” raiding 20 locations and arresting the first group of 8 suspects, seizing cash, computers, and documents on site. The speed of the police action was extraordinarily fast and rare in the entire history of the crypto industry.

October 2023

The number of arrests in the JPEX case increased to 28, including 28-year-old KOL Henry Choi Hiu-tung (founder of Hong Coin).

November 5, 2025

This brings us back to the report at the beginning of this article: half a month ago, after two years of investigation, the Hong Kong Police CCB officially prosecuted 16 individuals.

Why Was JPEX Able to Expand So Rapidly in Hong Kong After the Regulatory Upgrade?

Many people wonder how such a “three-no” exchange (no license, no transparency, no compliance) could rise so quickly. In fact, the rise of JPEX is not mysterious at all. It followed all the templates of Ponzi schemes and exchange scams that have appeared in Asia over the past decade: high returns, fake licenses, KOL hype, offline advertising bombardment… But what truly enabled its explosive growth in Hong Kong was this:

It took advantage of the gap between regulatory system upgrades and changes in public awareness.

1. Hong Kong was in a confusing “policy window period” for Web3

Starting in 2023, Hong Kong promoted virtual asset policies at a strategic level:

• Officials publicly supported Web3
• The licensing regime (VATP) was officially implemented
• Overseas platforms and capital rapidly gathered
• Hong Kong aimed to become Asia’s virtual asset hub

Under such political and policy momentum, the general atmosphere of “Hong Kong welcomes crypto assets” overshadowed the finer details.

Ordinary investors mistakenly believed: “Since Hong Kong supports Web3, the platforms here must be safe.”

But the truth was the opposite: summer 2023 was the most chaotic period in regulation, and the easiest time for platforms to “fish in muddy waters.”

The “time gap” between policy announcements and regulatory enforcement was precisely the loophole JPEX exploited most skillfully.

2. Massive advertising created a “compliance illusion”

JPEX’s biggest success was not technology but advertising — blanketing the MTR, airport, buses, and mall façades. As mentioned earlier, such overt advertising was unprecedented in crypto history, making JPEX look like:

“A big platform with strength, background, and the confidence to advertise publicly.”

The psychological impact of advertising is extremely powerful: Real scams do not hide in the shadows — they often stand in the brightest places.

3. Fake overseas licenses + KOL endorsements formed a “trust closed loop”

The reason users were convinced is that JPEX constructed a fake compliance narrative:

• Claiming to be licensed in multiple countries
• Using regulator logos to imply endorsement
• KOLs guaranteeing “these licenses have been checked; it’s very safe”
• OTC shop staff reassuring retail investors that “Hong Kong’s regulation is strict, so JPEX must be fine”

Retail investors believed they had done their “due diligence,” but in reality, all the information was fabricated.

JPEX’s manipulation wasn’t sophisticated — it merely targeted human psychology precisely: Compliance illusion + KOL-generated safety = You won’t need to think.

4. High returns created irresistible incentive traps

JPEX’s main attraction was its Earn product, promising annualized returns of:

• BTC 20%
• ETH 21%
• USDT 19%

This drew in a huge number of investors. By using OTC shops and social media KOLs for promotion, the platform created the image of “low risk, high return.”

Where Will Hong Kong’s Virtual Asset Market Go After JPEX?

The impact of JPEX is substantial. Short-term regulatory tightening is guaranteed. If you observe Hong Kong’s crypto policy, you’ll notice that although the policy framework has been implemented, approvals remain extremely strict, and only a small number of institutions have succeeded.

It is clear that after JPEX, Hong Kong will no longer allow a second “JPEX.” Licensed platforms will become the only entry point. While this means the industry will become healthier, competition will also become more intense.