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Police Crack Down on JPEX Continues with Millions RecoveredHong Kong authorities are intensifying their efforts to deliver justice to victims of the JPEX cryptocurrency exchange fraud, a scandal that has left thousands of investors in distress.According to recent reports in the South China Morning Post (SCMP) on Wednesday and Friday, more arrests have been made, with the recovery of more assets. The pursuit of those responsible for orchestrating this massive scam is in full swing.Photo by RJ Joquico on UnsplashLargest digital asset fraud in Hong Kong historyThe Dubai-headquartered JPEX crypto exchange, an unauthorized platform, stands accused of defrauding more than 2,400 individuals of nearly $200 million, marking it as the largest digital asset fraud case in Hong Kong’s history. During a recent press conference, the Secretary for Security of Hong Kong, Chris Tang Ping-keung, expressed his commitment to ensuring justice prevails for the victims.Tang revealed that among the assets seized by the police were more than HK$8 million ($1 million) in cash and assets valued at HK$77 million ($9.8 million), including real estate and digital currency. These significant seizures mark a pivotal step in the ongoing investigation. Furthermore, the police have apprehended 12 individuals connected to the JPEX scheme, including three employees of JPEX Technical Support Company and two YouTubers.The first signs of trouble emerged when JPEX users faced difficulties in withdrawing their funds on September 15. In response to mounting complaints and regulatory warnings, JPEX infamously raised its withdrawal fees to 999 Tether in a desperate attempt to discourage users from withdrawing funds. This maneuver raised suspicion and intensified the scrutiny on the exchange.Ongoing investigationLocal authorities in Hong Kong have been inundated with 2,369 complaints from victims who lost their investments in the unregulated exchange. The estimated total monetary loss is HK$1.4 billion ($178 million). While the police continue towards bringing those responsible to justice, they are also collaborating closely with regulators to implement measures aimed at preventing the emergence of such fraudulent schemes in the future.Recent developments have seen the net tighten around the individuals connected to JPEX. Additional arrests have been made in Hong Kong and Macao. Hong Kong police apprehended two individuals who were caught attempting to destroy documents with paper shredders and bleach. In addition, they seized almost HK$9 million ($1.15 million) in cash and gold from three apartments.Meanwhile, Macao authorities apprehended two more individuals and confiscated over HK$14 million ($1.8 million) in cash and valuables. The suspects had made multiple visits to Macau this month, which may be linked to their illicit activities.Hong Kong’s Securities and Futures Commission (SFC) had issued a prior warning, stating that JPEX operated without the necessary licenses and had maliciously frozen users’ funds. Last week, the SFC took a step further, blocking access to web and mobile versions of the platform with JPEX responding by encouraging users to sidestep the measure through the use of VPN.

HashKey Gears Up to Offer Trading Service to Retail TradersHashKey is gearing up to launch its services to retail traders in Hong Kong with the intention of offering them Bitcoin and Ether trading products initially.The Hong Kong-based digital asset management platform received full licensing approval from the local regulator, the Securities Futures Commission (SFC), earlier this month. It’s anticipated that the platform will launch to retail on August 28.That’s according to a report from a local media source earlier this week. Financial publication Investing.com stated: “General investors in the period can only trade Bitcoin (BTC) and Ethereum (ETH), because these two currencies currently account for most of the trading volume in the market.“It’s worth noting, however, that investors will be subject to a cap, permitted to allocate only up to 30% of their net worth into the realm of cryptocurrencies while utilizing the platform.Photo by Traxer on UnsplashServing retail clientsIt’s a significant milestone for both HashKey and the regulator, given that Hong Kong has been making huge efforts to further the development of digital asset innovation within the Chinese autonomous territory over the course of the past twelve months. Hashkey, alongside brokerage and exchange business OSL (also successful in obtaining a license), has been collaborating with regulators from an early stage in the lead-up to both receiving full licensing.HashKey got to this point by focusing on two pivotal licenses offered by the SFC. The first of these licenses, known as Type 1, paved the way for HashKey to initiate a virtual asset trading platform, aligning seamlessly with the regulatory framework laid out under Hong Kong’s securities laws. The second license, Type 7, empowers the crypto platform to furnish automated trading services to both institutional and retail clientele.Nurturing digital asset innovationHong Kong has maintained a resolute focus on cultivating a crypto-friendly environment within its borders in 2023. Echoing this sentiment, Financial Secretary Paul Chan asserted the government’s and regulatory bodies’ determination to incubate a robust crypto and fintech ecosystem throughout the year.By March, over 80 crypto enterprises signaled their intent to establish a presence in Hong Kong, with several major players in the crypto industry among them. In April, the Hong Kong Monetary Authority (HKMA) issued a call to banks, urging them to extend their services to cryptocurrency companies.Banking remains a difficulty in Hong Kong for crypto businesses despite the HKMA’s efforts. However, in the case of both HashKey and OSL, both are being banked by Hong Kong’s largest virtual bank, ZA Bank.In May, the HKMA unveiled a comprehensive licensing framework tailored for crypto platforms, imposing a deadline of June 1 for compliance. As August rolled in, a select few crypto platforms clinched the green light to offer crypto trading services to an eclectic client base encompassing both retail and institutional participants.This regulatory framework, designed to safeguard the interests of investors, is playing a large part in Hong Kong’s recent success in developing the sector. In this particular instance, it will mean that retail traders will be granted access to Bitcoin and Ethereum exclusively. This curtailed selection provides a good starting point for retail trading, and it’s likely that we will see HashKey’s trading offering being extended to cover additional digital assets as soon as local regulators permit it.

Taiwan has built a prototype platform that potentially could provide for a central bank digital currency (CBDC). In light of that development, there are plans afoot to hold a number of hearings and forums in 2025 relative to CBDC development. In a report cited by local news media, Taiwanese Central Bank Governor Yang Chin-long stated that the development of a CBDC is not an international competition. Yang is not motivated by a desire to be the first to launch a CBDC on the basis that such a thing doesn’t ensure a successful outcome.  At the outset, Taiwan intends to introduce a non-interest bearing CBDC although this may be revised as further development and rollout progress. The system may encompass the use of both anonymous and registered digital wallets, the report suggests.Photo by Timo Volz on UnsplashWholesale CBDCReports last year had disclosed that the retail CBDC prototype supports 20,000 transactions per second. The central bank also plans to develop a wholesale CBDC (wCBDC) proof of concept to support three sets of functionality which it plans to test via a unified ledger, developed with the assistance of Taiwan’s commercial banks.  According to feedback from the office of the Taiwanese parliament’s finance committee provided to The Block, Yang is due to present the report on the current state of progress relative to a CBDC on July 10 at the Legislative Yuan, Taiwan’s parliament. While no projected timeline has been provided for CBDC issuance, Yang emphasized that Taiwan’s CBDC project is a long-term affair. He disclosed that the Central Bank of the Republic of China (Taiwan) will take a three pronged approach to the new digital currency. In the first instance, the wCBDC will be used for for the purpose of interbank settlement relative to tokenized deposits.  In practice, this will mean that when a payee transfers a tokenized deposit to another party, the other party will receive the money instantly. However, in the background, the payee’s bank will need to transfer funds to the second party’s bank. Taiwan’s central bank also plans to trial the settlement of tokenized asset transactions. Settlement of securities in this way is seen as an opportunity to minimize risk when compared with commercially issued stablecoins. Such tests will be similar in nature to the wholesale digital ledger technology (DLT) trials carried out in recent times by the European Union (EU).  Purpose bound money trialLastly, the Republic of China plans to trial purpose bound money (PBM), a concept which covers the middle ground between programmable payments and programmable money. PBM was introduced in a whitepaper in 2023 by the Monetary Authority of Singapore (MAS). It enables the sender to specify certain conditions relative to the digital currency being sent. This may include a validity period and further specification as to how the money can be spent. This development represents the latest installment in an ongoing pipeline of announcements from various central banks with regard to CBDC project milestones. Last month, Qatar’s central bank announced the launch of the first phase of its CBDC project.