Investors Seek Recovery of Lost Assets in JPEX Fraud Case

Highlights:

• Investors Chan Wing-yan and Herbert Lam filed a civil lawsuit against JPEX for over HK$1.85 million.
• The plaintiffs discovered their assets were transferred to unknown wallets shortly after deposit.
• The police reported 73 arrests related to the JPEX scandal, with all individuals released on bail.

Two individuals have filed a civil lawsuit against cryptocurrency exchange JPEX, seeking to recover over HK$1.85 million in lost assets. This is the first civil action in an alleged fraud case involving over 2,600 victims and HK$1.6 billion in total losses. More lawsuits are anticipated.

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[Recap] Two people have lodged a civil claim against Hong Kong crypto exchange JPEX in a bid to recover more than HK$1.85 million.https://t.co/KeoQmh4SZ2

— Hong Kong Free Press HKFP (@hkfp) June 5, 2024

Lawsuit Over Missing Funds

The plaintiffs, Chan Wing-yan and Herbert Lam filed a writ of summons in the Hong Kong District Court against JPEX and several other defendants. The defendants include JP-EX Crypto Asset Platform, Web 3.0 Technical Support, and individuals associated with JPEX. According to the South China Morning Post, the lawsuit details three alternative claims filed by the plaintiffs.

The legal action names Felix Chiu, general manager of Coingaroo, an over-the-counter crypto exchange associated with JPEX, and three unidentified wallet holders as defendants. Chan registered two accounts with JPEX in July and August of last year and opened a third account in Lam’s name. 

These actions were influenced by seminars and promotional materials from social media influencer Joseph Lam, also known as Lin Zuo, who was arrested in September for conspiracy to defraud but was not charged.

JPEX’s Alleged Accomplices

Chan Wing-yan transferred HK$850,000 and paid an additional HK$1 million in cash to Chiu to purchase Tether (USDT) for her JPEX accounts. She also transferred 6219.6 USDT (HK$48,575) from another cryptocurrency platform to JPEX, totaling 247,498 USDT (HK$1.93 million). The plaintiffs discovered that unknown parties transferred their assets to unknown wallets shortly after each deposit, leaving their accounts nearly empty.

The plaintiffs allege they could not withdraw their assets after JPEX imposed a 99 percent withdrawal fee last September. This action followed the Hong Kong Securities and Futures Commission’s identification of JPEX as an unlicensed virtual asset trading platform.

Police Investigation and Arrests

The police reported 73 arrests related to the JPEX scandal, with all individuals released on bail and required to report regularly. Among those arrested was Joseph Lam Chok, also identified as Lin Zuo. The plaintiffs mentioned him by name in their suit. By April, the police received 2,265 complaints against JPEX. Consequently, a legislator stated he was in contact with hundreds of victims and knew ten more civil suits were under consideration.

The lawsuit revolves around three transfers into JPEX wallets that Chan made in July and August, totaling $110,500 in Tether and $130,000 in cash at the current exchange rate. Lam made one of the transfers. The plaintiffs later couldn’t withdraw those funds and discovered that someone had transferred them from their wallets within five minutes of the deposit.

Chan and Lam’s lawyer, Joshua Chu Kiu-wah, stated,

The findings from the civil proceedings may bolster the parallel criminal investigation against the suspects, underscoring the importance of this multifaceted legal strategy for the victims.

The civil suit is currently the only option for victims of the alleged fraud to recover their funds. The plaintiffs have lodged three alternative claims. One claim seeks to recover about 226,013 USDT, allegedly converted into other cryptocurrencies without authorization. They have requested the court to trace the assets. They also seek an injunction to prevent the defendants from dealing with the assets.

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