Unlicensed cryptocurrency exchange JPEX in Hong Kong has been involved in a case with a total amount exceeding 1.61 billion Hong Kong dollars (approximately 630 million New Taiwan dollars) since its collapse in September last year. Recently, two victims have filed the first civil lawsuit against JPEX and related individuals, seeking compensation of up to 240,000 Thai Baht (approximately 1.85 million Hong Kong dollars or 7.66 million New Taiwan dollars).
According to the report by Ming Pao, Hong Kong media, two victims have officially filed a lawsuit with the District Court, represented by their lawyers. The defendants in the lawsuit include JPEX Group and a total of seven other individuals. This is the first civil compensation case against JPEX. Zhu Qiaohua, a consultant lawyer at the law firm representing the plaintiffs, Ho Kin Yiu & Co., stated that a successful lawsuit could serve as a demonstration effect and help more victims recover their losses.
According to the complaint, the two plaintiffs, Chen Ying’en and Li Shunqian, attended a cryptocurrency seminar hosted by internet celebrity Lin Zuo last year from July to August. They mistakenly believed that JPEX was a licensed, reliable virtual asset trading platform. They opened three accounts on the JPEX platform in their own names and deposited virtual currencies several times, including approximately 6,220 Thai Baht transferred from Binance.
Under Lin Zuo’s introduction, Chen Ying’en used an invitation code to purchase Thai Baht on the over-the-counter platform “Coingaroo” and, under the guidance of Zhao Jingxian, the general manager, deposited a total of 1.85 million Hong Kong dollars in cash or by bank transfer into Zhao Jingxian’s accounts at Star Bank and Lihui Bank, in exchange for over 240,000 Thai Baht.
Unfortunately, on September 13 last year, the Hong Kong Securities and Futures Commission issued a warning statement, stating that JPEX was unlicensed and had not applied for a license. Subsequently, JPEX raised the handling fees and restricted users from withdrawing their funds. On the same day, Chen Ying’en discovered through a blockchain browser that the amounts in the wallets of the three accounts had been transferred without authorization. However, the JPEX account still indicated that the users held JPC and JPP platform tokens, bitcoins, and Thai Baht, with a remaining balance of approximately 264,000 Thai Baht.
As a result, the two plaintiffs have brought a lawsuit against JPEX and seven other individuals, including:
– “JP-EX CRYPTO ASSET PLATFORM PTY LTD,” JPEX’s registered company in Australia
– “WEB3.0 TECHNICAL SUPPORT LIMITED,” JPEX’s registered company in Hong Kong
– The owners of the three blockchain wallet addresses
– Zhao Jingxian, the general manager of the over-the-counter platform “Coingaroo”
– Any person who implemented, assisted, or participated in the transfer of assets to the aforementioned defendants
According to the complaint, the two plaintiffs accuse the first to fourth and seventh defendants of breaching their fiduciary duties and request the court to order the following:
– The defendants must return the approximately 52,000 Thai Baht and 190,000 Thai Baht held in trust,
– A total of 240,000 Thai Baht or the equivalent of 1.85 million Hong Kong dollars (approximately 7.66 million New Taiwan dollars).
– The defendants must restructure or repay these assets or bear the responsibility for recovering the assets and trace their whereabouts or provide corresponding compensation.
– Prohibit the defendants and their employees from dealing with the aforementioned assets.
In addition, the plaintiffs have proposed an alternative solution:
– Treat the two plaintiffs as platform users, and the balances displayed in their platform accounts will be treated as loans, requesting repayment from the first, second, and seventh defendants.
– Regarding the Thai Baht transactions, the plaintiffs point out that they paid over 1.85 million Hong Kong dollars to Zhao Jingxian but did not receive over 240,000 Thai Baht that they were entitled to, and they demand the return of the unjust enrichment.
The reason for initiating the civil lawsuit at this time, according to Zhu Qiaohua, is that the criminal investigation is still ongoing. However, civil lawsuits have a limitation period of only six years, and if they wait until the criminal investigation is completed before filing the civil lawsuit, there may not be enough time to proceed with the relevant procedures. Furthermore, any progress in the civil lawsuit during the period may also have an impact on criminal prosecutions.
Tasman Tam, the barrister representing the two plaintiffs, stated that they will pursue the recovery of losses based on multiple legal grounds, one of which is the trust responsibility of the JPEX Group in the case. All the involved virtual currencies were held by JPEX or related individuals in a trust form, and the actual owners of the virtual assets are the plaintiffs. Therefore, the defendants must return the relevant virtual assets.
Zhu Qiaohua stated that if this lawsuit is successful, it will serve as an example for other victims and help them recover their losses.