Victims win first civil action against the FTX of Hong Kong
A Hong Kong court has ruled in favor of two investors who filed a civil suit against defunct Dubai-based cryptocurrency exchange JPEX and its affiliate Web 3.0 Technical Support.
With the judge’s ruling, 1.85 million Hong Kong dollars (around $238,000) will be recovered on behalf of the plaintiffs.
“What this newest judgment [shows] is that victims of virtual currency-related cases do have judicial recourse and set a precedent for all those victims who are in similar positions longing to recover their cryptos, but might be at a loss as to what options they have other than waiting for results from criminal investigation,” Joshua Chu, co-chair of the Hong Kong Web3 Association and the lawyer representing the plaintiffs, tells Magazine.
‘They can take their own steps and police will need victims to have a court order to vest frozen assets in any event,”
Chu says that victims of virtual currency fraud in Hong Kong face challenges in recovering funds due to limited precedents and a lack of specialized legal expertise.
This difficulty is further compounded by the six-year statute of limitations for civil cases, which can give bad actors hope that they can simply wait out the deadline.
Chu and his clients are now seeking enforcement action to recover funds in police custody. Local authorities froze around $29 million related to the case in April.
The JPEX scandal first emerged in September 2023 when the Hong Kong Securities and Futures Commission (SFC) warned that the exchange was unlicensed.
JPEX statement a month before chaos. (JPEX)
This scandal has been likened to Hong Kong’s version of the FTX collapse due to its mismanagement, lack of transparency, big investor losses and high-profile endorsements.
It was a setback for the local industry, as withdrawal freezes and subsequent arrests occurred while the city’s government was…
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