Hong Kong Crypto Fraud Case Sets Precedent for Influencer Liability in Unlicensed Schemes

Hong Kong authorities have charged 16 individuals, including influential former lawyer Joseph Lam Chok, in the city's largest cryptocurrency fraud case, which defrauded over 2,700 investors of approximately HK$1.6 billion ($205.8 million) since 2023. Lam, a prominent social media personality, was released on bail last year but faces charges of conspiracy to defraud, fraudulent inducement to invest, and money laundering under Hong Kong's Anti-Money Laundering and Counter-Terrorist Financing Ordinance, according to a a Cryptonews report. The case marks a landmark application of the law to a crypto-related scheme, signaling heightened regulatory scrutiny in the sector, according to a Decrypt report.

The JPEX platform, which operated without a license, lured investors through aggressive marketing campaigns and endorsements by influencers and over-the-counter (OTC) traders. Lam, who promoted the platform to his followers, became a central figure in the scandal after his September 2023 arrest. Police allege that the operation used fake regulatory backing and misleading claims to attract deposits, which were later frozen or redirected to unregulated accounts, according to a CryptoTimes article. More than 80 individuals have been arrested since the investigation began, with authorities seizing HK$228 million in assets and issuing Interpol red notices for three key fugitives, including alleged mastermind Mok Tsun-ting, according to a Yahoo Finance report.

Legal experts have criticized Lam's public conduct post-arrest, including a press conference where he claimed to have "slept well" after his bail release. Joshua Chu, a Hong Kong Web3 Association co-chair, noted that such remarks reflect a "lack of contrition" and could harm Lam's defense strategy. Chu emphasized that influencers who promoted unlicensed platforms despite regulatory warnings expose themselves to liability, whether they knowingly participated in fraud or failed to exercise due diligence, as Decrypt reported. The case has also sparked debates about the role of social media personalities in crypto markets, with analysts suggesting it could set a precedent for holding promoters accountable, according to a Coinotag article.

Hong Kong's commercial crime bureau has described the investigation as "highly complex," involving forensic analysis of digital transactions and collaboration with the Securities and Futures Commission. Authorities have frozen bank accounts and properties worth millions, while victims await clarity on asset recovery. Chu warned that compensation will depend on tracing funds directly tied to the platform, as Decrypt noted.

The JPEX case has intensified global efforts to combat crypto-based financial crimes. Interpol's red notices highlight the cross-border nature of the fraud, with suspects believed to have fled Hong Kong. Meanwhile, Hong Kong leader John Lee has called for stronger investor education and tighter licensing rules for crypto platforms, underscoring the need to balance innovation with risk mitigation, as Coinotag reported.