Hong Kong court rules for investors in $238K JPEX fraud case
A Hong Kong court ruled in favor of two investors in a civil lawsuit against the defunct JPEX cryptocurrency exchange and a related local business, marking a pivotal moment in what is considered the city’s largest digital asset fraud case.
Judge Grace Chow Chiu-man of the Hong Kong District Court issued a declaratory judgment in favor of Herbert Lee Sung-him and Chan Wing-yan, awarding them 1.85 million Hong Kong dollars ($238,000) in damages.
The ruling indicated that the recovery would be in the form of 247,000 USDT (CRYPTO:USDT).
Since the defendant did not appear in court, the case will not advance to a trial phase.
Lee and Chan filed the lawsuit in June, alleging that JPEX, a Dubai-based exchange, operated without a license.
The complaint named Web3 Technical Support, which reportedly managed the deposits in trust for JPEX.
Chan claimed to have transferred USDT to JPEX wallets between July and August 2023, but the funds were promptly moved out, and recovery attempts were unsuccessful.
Judge Chow confirmed that Web3 Technical Support held the deposits in trust for the plaintiffs alongside JPEX.
In addition, Web3 Technical Support was ordered to pay approximately $15,400 in court costs.
According to Joshua Chu Kiu-wah, the plaintiffs’ representative, enforcement actions are planned to recover funds currently frozen by authorities.
Chu acknowledged logistical challenges due to the large number of victims involved but cautioned against delays given potential statute of limitations concerns.
The JPEX scandal erupted in September 2023 after the Hong Kong Securities and Futures Commission warned that the exchange was operating without regulatory approval.
Over 2,200 complaints were filed against JPEX, leading to multiple arrests, including influencers who promoted the platform.
The exchange faced accusations of imposing high withdrawal fees and converting user funds into “DAO shareholder dividends” in an attempt to shift towards a decentralised autonomous organisation model.
With an estimated 2,600 victims and losses amounting to around $206 million, further legal action against JPEX is expected.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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