Crypto Influencer Arrested in Hong Kong Over JPEX Association
Hong Kong police have taken prominent social media influencer and former lawyer Joseph Lam into custody. Known as “Jolamchok” on Instagram, Lam has been arrested due to his connection with the troubled cryptocurrency exchange, JPEX.
According to a report from the South China Morning Post (SCMP) on Monday, law enforcement officials conducted a search of his office, where they seized various items of potential evidence, including a plastic bag containing banknotes.
Celebrity promotion
The Hong Kong regulator, the Securities and Futures Commission (SFC), recently issued a warning squarely pointing fingers at JPEX for actively enlisting online celebrities like Joseph Lam and over-the-counter (OTC) money changers to promote the platform’s services and products to the Hong Kong public. Hong Kong police are understood to have searched the offices of local OTC exchange service Coingaroo. That action is suspected to be related to the issues that have befallen JPEX.
An unverified report suggests that Lam, who is also known as Lin Zuo, may have presented questionable investment “schemes” to a cryptocurrency investment chat group. One of the reported victims was allegedly persuaded to invest 100,000 Hong Kong dollars (approximately $12,800) in cryptocurrencies.
In one instance, Lam made claims within the group, stating that people were relentlessly pursuing him for payments and that the amount of money involved was five times higher than usual.
“Whatever doesn’t kill you makes you stronger”
On September 17, the day before his arrest, Lam shared a news article on his Instagram account, suggesting that he had not been negatively affected by the JPEX investigations. The caption read, “Whatever doesn’t kill you makes you stronger.”
Following this development, Lam visited the police alongside his legal representatives to provide the necessary information regarding his involvement with JPEX. In a related development, another crypto influencer, Chen Yi, is understood to have been arrested. Yi is suspected of conspiracy to commit fraud.
Liquidity crisis
JPEX has publicly attributed its liquidity crisis to regulatory pressures and “third-party market makers.” In response, the exchange increased withdrawal fees and suspended certain operations. They have, however, promised to restore liquidity from third-party market makers promptly and gradually return withdrawal fees to normal levels, with details to follow after negotiations.
JPEX maintains that it was being treated unfairly. The exchange also said that it would freeze new trades while existing trades would continue to be active until completion.
This arrest and the ongoing issues surrounding JPEX come amid wider concerns in the cryptocurrency sector. A recent report from Bitfinex indicated that capital outflows from the crypto markets amounted to a staggering $55 billion in August alone. This substantial outflow has not only impacted Bitcoin but has also affected the liquidity of Ether and stablecoins, underlining the broader challenges faced by the crypto sector.
As the investigation into Joseph Lam’s involvement with JPEX continues, it remains to be seen how this development will impact the ongoing troubles facing the cryptocurrency exchange and the broader crypto ecosystem in Hong Kong and beyond.
