Hong Kong police on Monday arrested six people on suspicion of "conspiracy to defraud" after receiving more than 1,400 reports from potential victims who claimed to have lost around $128 million on troubled cryptocurrency exchange JPEX.
It is the largest case since the Chinese finance hub in June rolled out new rules that will eventually require all crypto exchanges in the city to acquire licences and be subject to investor protections.
Last week, the city's Securities and Futures Commission (SFC) warned that JPEX was advertising itself as a "licensed and recognised platform" while it was unlicensed, boasting of very high returns on its products, and offering crypto deposit and earning services which were not allowed under the new rules.
The case has since been referred to the police's commercial crime bureau.
Following up on the referral, four men and two women were arrested in a multi-district operation on Monday and have been detained for investigation, the police said in a written statement, without specifying the arrestees' ages and identities.
"Police have received reports from 1,408 persons in relation to the case, which involve around HK$1 billion ($128 million)," the statement said.
The force added that there may be more arrests.
At least two social media influencers who have been high-profile promoters of JPEX were seen being escorted by police in searches of their crytocurrency workshops, according to live broadcast images.
One of them is barrister-turned insurance salesman Joseph Lam, whose social media description reads "Hong Kong Trolling King", and the other is named Chan Yee, who openly refuted the SFC last week on her YouTube channel which has more than 220,000 subscribers.
In response to the plice operation, JPEX expressed "extreme disappointment at the SFC's unfair practices that disrupt market order" in a statement on its website.
"Not only does their attitude contradict the government's policy development direction of making Hong Kong a Web 3.0 city, but their biased stance also does not fulfil their role as a fair and impartial regulator, let alone protect the multitude of investors in Hong Kong," the statement said.
The platform has delisted all transactions on its "Earn Trading" interface from Monday due to liquidity restrictions imposed by third parties in light of the SFC's warning.
In a press release dated February, JPEX said it had "$2 billion in global assets and technology under its management" and had spent more than $5 million on promoting its services in Hong Kong.