As a seasoned researcher with years of experience in the financial and cryptocurrency industries, I find this ruling by the Hong Kong District Court a significant step towards accountability in the digital asset space. The fact that this case is considered Hong Kong’s biggest alleged financial fraud underscores the need for regulatory oversight in the rapidly evolving world of cryptocurrencies.
In a landmark decision, a court in Hong Kong sided with two investors who initiated a civil lawsuit against the collapsed JPEX cryptocurrency platform and a related Hong Kong-based enterprise. This case, known as one of Hong Kong’s largest alleged financial scams, marks the first legal action taken in this context.
In simpler terms, Judge Grace Chow Chiu-man made a decision that ruled in favor of the plaintiffs without needing a full trial.
85 million Hong Kong dollars, equivalent to approximately $238,000, are being sought for the plaintiffs, Herbert Lee Sung-him and Chan Wing-yan. This recovery will be in the form of 247,000 Tether (USDT).
The defendant didn’t appear
In June, Lee and Chan initiated a lawsuit against JPEX, a Dubai-based tech support company for Web3, as well as other parties. They asserted that Chan had carried out three transactions of USDT to JPEX’s wallets in July and August of the year 2023.
One of the transactions was made under Lam’s account. The cryptocurrency was swiftly withdrawn from their digital wallets, leaving them with no means to get it back.
JPEX has ceased operations. No representative from Web3 Technical Support was present at the hearing. The judge determined that…
“As for the injunction sought against D2 [Web3 Technical Support], I am also satisfied that it is necessary and ancillary to assist in the recovery of the USDT Deposits, which I have held on the Ps’ [plaintiffs’] pleaded case were held on trust by D2 (together with D1 [JPEX]) for P1 [Chan].”
Web3 Technical Support will be charged approximately $15,400 in court costs as well.
Speaking to The South China Morning Post, lawyer Joshua Chu Kiu-wah stated that the plaintiffs plan to initiate an action to collect the funds, which are currently being held by the police.
With the court order now in place against the exchange operator, the claimants can collaborate with external entities to implement and uphold this court order, as mentioned by Chu.
Not the last case against JPEX
The JPEX controversy kicked off in September 2023 when the Hong Kong Securities and Futures Commission flagged that the platform was functioning without a necessary license. This triggered over 2,200 complaints to the Hong Kong police, leading to multiple arrests, including those of influencers and celebrities who promoted the exchange.
As an analyst, I’d rephrase that statement like this: In an effort to keep its client base and transform into a Decentralized Autonomous Organization (DAO), JPEX implemented high withdrawal fees and reclassified user funds as “dividends for DAO shareholders.
Approximately 2,600 individuals are believed to have been affected by this case, collectively losing a staggering sum of $206 million. Further legal proceedings are anticipated.
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2024-10-30 20:18