Investors file first civil suit against JPEX, more suits expected

Two people have filed a civil suit against cryptocurrency trading company JPEX and other defendants. JPEX is accused of fraud involving 1.6 billion Hong Kong dollars ($208 million). This is the first civil suit in the case, and more are expected to follow.

Herbert Lam Sung-him and Chan Wing-yan are each seeking $236,500 in Hong Kong district court, according to the South China Morning Post. On June 4, the pair filed three alternative claims, meaning the court could choose between them.

In addition to JPEX, the suit names as defendants an affiliated company — Web3.0 Technical Support, “any persons who carried out or assisted in the scheme,” three individuals identified as “wallet holder[s]” and Felix Chiu King-yin, general manager of JPEX-associated cryptocurrency exchange Coingaroo.

Civil suit is only option against JPEX

The suit revolves around three transfers into JPEX wallets Chan made in July and August totaling $110,500 in Tether (USDT) and $130,000 in cash at the current exchange rate. One of the transfers was made in the Lam’s name. The plaintiffs were later unable to withdraw those funds. They found that the funds had been transferred out of their wallets “within five minutes” of deposit.

Related: Hong Kong to tighten crypto regulation in wake of JPEX fraud case

A civil suit is the only way for victims of the alleged fraud to recover funds, Chan and Lam’s lawyer, Joshua Chu Kiu-wah, said. He added:

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

JPEX had plenty of alleged accomplices

The investigation into Dubai-based JPEX began in September after the Hong Kong Security and Futures Commission identified it as an unlicensed virtual asset trading platform. Eleven people were arrested that month. According to the Hong Kong Free Press, the total number of arrestees had risen to 73 by June 3, and all have been released on bail.

Social media influencer Joseph Lam Chok, also identified as Lin Zuo, was among those arrested. The plaintiffs mentioned him by name in their suit.

The police had received 2,265 complaints against JPEX by April. Legislator Johnny Ng Kit-chong said he was in contact with hundreds of victims of the alleged and knew of 10 more civil suits under consideration.

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