In this file photo dated Oct 31, 2022, visitors pass by a booth of the Hong Kong Digital Asset Exchange on the first day of Fintech Week 2022 in Hong Kong. (PHOTO / AFP)

Hong Kong police and crypto experts on Thursday called on the virtual asset community to strengthen investor education as the plight of the unlicensed platform JPEX sparked widespread concern over the financial center’s ability to become a digital asset hub.

Robert Lui, Hong Kong digital asset leader of Deloitte, said at a discussion forum that it is important to tell the public that virtual assets are not for speculation, but for transactions in the growing Web3 ecosystem — a new version of the internet that is based on blockchain.

More than 2,400 users have filed complaints about JPEX, reporting losses of nearly HK$1.5 billion ($191.64 million). Fifteen people, including popular influencers, have been arrested on suspicion of conspiracy to defraud 

He said trading in virtual assets is different from a traditional investment like stock trading, which has a prospectus and balance sheet for investors to pore over, so the sector should find ways to inform the public, who have not been exposed to such assets, of the rules and risks involved.

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Addressing the same event, Lester Ip, chief inspector of the police’s cybersecurity and technology crime bureau, said retail investors in Hong Kong should trade in virtual assets at licensed exchanges and be wary of the platforms’ promised returns. 

“If a platform promises a return rate of more than 10 to 20 percent, the public should know it is unrealistic,” Ip said. 

Their remarks came after JPEX was found to be operating in the city without a license, which sparked widespread concern over the financial hub’s ability to become a virtual asset hub.

More than 2,400 users have filed complaints about JPEX, reporting losses of nearly HK$1.5 billion ($191.64 million). Fifteen people, including popular influencers, have been arrested on suspicion of conspiracy to defraud.

The Securities and Futures Commission (SFC) on Monday said it would publish a list of cryptocurrency exchanges that have applied for retail trading licenses as well as platforms that are deemed to be suspicious.

Four operators – Hong Kong Virtual Asset Exchange, HKBitEx, Hong Kong BGE Ltd and Victory Fintech Co Ltd – have applied for official approval, according to the watchdog.

At present, only two virtual asset trading platforms – HashKey Group and OSL Digital Securities – are licensed to offer their services to retail users.

READ MORE: Virtual asset trading platforms in HK must be licensed by June 1

Samuel Lok, chief compliance officer of HashKey Group, said it will take time for the virtual asset community to improve investor education and regulatory issues as many laws and regulations in the sector are those that apply to traditional finance.

Contact the writer at evanliu@chinadailyhk.com