Hong Kong’s JPEX Exchange Under Investigation Amid RugPull and Money Laundering Claims

Bitrace has uncovered concerning allegations surrounding JPEX, a Hong Kong-based cryptocurrency exchange. Not only has JPEX been suspected of orchestrating a RugPull, but it has also come under scrutiny for its alleged role as a money laundering hub. Transactions involving more than 190 million risk TRC20-USDT over the past 20 months have coursed through associated addresses, potentially jeopardizing investors who engage with the platform.

Evidence are displayed by police for media after police arrested six people following allegations of fraud at an unlicensed cryptocurrency exchange in Hong Kong, Tuesday, Sept. 19, 2023. (AP Photo/Louise Delmotte)ASSOCIATED PRESS

Regulatory Alarm Bells for JPEX

The Hong Kong Securities and Futures Commission (SFC) has sounded a strong warning, asserting that JPEX operates as an unregulated virtual trading platform. The SFC has made it explicitly clear that none of the entities within the JPEX Group possess the necessary licenses to conduct business as virtual asset trading platforms in Hong Kong. These allegations have cast a dark shadow over JPEX’s credibility as a cryptocurrency exchange, prompting the Hong Kong Commercial Crime Bureau to launch a full-scale investigation into the matter.

Bitrace’s Unearthing of Money Laundering Activity

Bitrace, renowned for its involvement in uncovering illicit cryptocurrency activities, previously raised concerns about JPEX being exploited as a money laundering hotspot. Their latest blockchain-based fund audit has shed further light on these worries. Bitrace meticulously audited five prominent TRON (TRC20) wallets associated with JPEX, with this article highlighting one such wallet as a representative example.

Audited Wallet: TLGiN6DevzwNNSWhT3KUtRLnrZx71qoQ2o

Audit Period: December 31, 2021, 23:36:42 – September 14, 2023, 10:29:33

Audit Focus: The risk associated with funds flowing into the address, encompassing online gambling, illicit activities, and money laundering.

The data reveals that wallet TLGiN6DevzwNNSWhT3KUtRLnrZx71qoQ2o interacted with a staggering 30,585 users over the past 20 months, amassing a total of 687,002,533 USDT. Of this substantial sum, a significant portion, accounting for 22.04%, has been labeled as high-risk funds, amounting to 151,415,358 USDT.

Monthly fund flow data shows a noticeable spike in the influx of risk funds into TLGiN6 during the year 2023, potentially mirroring an uptick in JPEX’s operational activities.

High-Risk Users at the Center of Concern

Bitrace also undertook a multifaceted investigation into JPEX user addresses, aiming to construct profiles of high-risk users. The findings indicate that the two addresses making the most significant transfers to TLGiN6 are both flagged as high-risk. The first address executed 969 transactions amounting to 1,092,244 USDT, associated with money laundering. The second address, with 897 transactions totaling 387,692 USDT, is linked to illicit activities such as online gambling, the dark web, and money laundering. These two addresses collectively contribute a mere 0.22% of the total funds received.

As an illustrative example, another high-risk user address received 1600 USDT this month from a fund pyramid scheme, 160,000 USDT in June from an online gambling platform, and 70,000 USDT from the proceeds of a coin theft case. This address has transferred a total of 830,400 USDT to JPEX, suggesting its involvement as an agent for online gambling platforms and its exploitation by other entities for cryptocurrency money laundering.

In conclusion, the presented evidence strongly suggests that JPEX has been attracting an alarmingly high proportion of risk cryptocurrency funds from high-risk users during its operations. Investors should exercise extreme caution when engaging with the platform, as their funds may inadvertently become intertwined with illicit activities.

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