A Hong Kong-based social media influencer has been reportedly arrested after investigations around the liquidity crisis of the crypto exchange JPEX traced back their involvement.
Hong Kong police reportedly arrested crypto influencer Joseph Lam (Lin Zuo), who goes by the username ‘jolamchok’ on Instagram, for his association with JPEX, according to a South China Morning Post report. In addition, the report suggests that the police raided his office and seized boxes of evidence, including a plastic bag containing banknotes.
According to a local report, the Securities and Futures Commission of Hong Kong recently issued a statement blaming JPEX for actively promoting the platform’s services and products to the Hong Kong public through online celebrities and over-the-counter money changers.
Another unconfirmed report suggests that Lin Zuo presented “schemes” to a chat group created for cryptocurrency investment. One of the alleged victims, Miss Chen, reportedly was convinced to invest $12,800 (100,000 Hong Kong dollars) in crypto.
However, Joseph Lam did not immediately respond to Cointelegraph’s request for comment confirming or denying the accusations. According to the report:
“He (Lin Zuo) from time to time claimed in the group that people kept looking for him to “pay money”, threatened that “the amount of money on these two days is five times the usual”.”
On Sept. 17, the influencer shared a news article claiming he “was not hit in the JPEX incident” as he posted a caption saying “Whatever doesn’t kill you makes you stronger.”
The development preceded Zuo’s visit to the police along with his lawyers to provide necessary information.
JPEX blamed regulators and “third-party market makers” for a liquidity crisis that has seen the platform hike withdrawal fees and suspend certain operations. “We promise to recover liquidity from third-party market makers as soon as possible and gradually adjust the withdrawal fees back to normal levels,” JPEX said in a statement, noting the details will be announced after negotiations conclude.
Related: Binance CEO brushes off negativity, assures firm has ‘no liquidity issues’
A recent report from crypto exchange Bitfinex revealed that the capital outflows in the crypto industry reached $55 billion in August.
With about $55 billion being drained from the crypto markets over the past month, capital outflows did not just affect Bitcoin (BTC) but also impacted Ether (ETH) and stablecoin liquidity.
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