JPEX victims win the lawsuit! The court ruled to return 240,000 USDT, is there hope for recovery?

After the unlicensed Cryptocurrency exchange JPEX in Hong Kong went bankrupt in September last year, two victims filed a lawsuit in the Hong Kong regional court, demanding 240,000 Thai baht or 1.85 million Hong Kong dollars (about 7.6 million New Taiwan dollars) from JPEX Group and 6 other defendants. The court recently ruled in favor of the two victims. (Background: JPEX's first civil lawsuit》Victims claim 1.85 million Hong Kong dollars, JPEX's registered company in Hong Kong absent) (Background: Latest JPEX fraud case》Chen Lingjiu left, Jumping Tiger and 3 other Taiwan suspects were prosecuted by the Northern Procuratorate) The unlicensed Cryptocurrency exchange JPEX in Hong Kong went bankrupt in September last year, leaving countless investors with nothing. Two victims recently filed a lawsuit in the Hong Kong regional court, demanding 240,000 Thai baht or 1.85 million Hong Kong dollars from JPEX Group and 7 other defendants, making it the first civil claim case against JPEX. The plaintiffs accused JPEX of violating its trust obligations. According to the court report, the two plaintiffs are Chan Wing Yan and Lee Sung Him Herbert, and the 7 defendants are the JPEX-related company 'JP-EX Crypto Asset Platform PTY LTD', JPEX's registered company in Hong Kong 'WEB3.0 Technical Support Limited', the owners of 3 Cryptocurrency Wallets, the general manager of the over-the-counter exchange Coingaroo, Zhao Jingxian, and anyone who implemented, assisted, or participated in transferring the assets of the two plaintiffs to the above 6 defendants. The plaintiffs claimed that the defendants violated their trust obligations, and that their storage of USDT in JPEX's Wallet constituted an 'express trust'. They demanded the court to rule that the defendants hold the assets in trust, prohibit the defendants from processing the assets without the plaintiffs' consent, and return the assets to the plaintiffs. As the company registered in Hong Kong did not attend the trial, the plaintiffs applied for a 'default judgment'. The judge believed that the defendants had received the summons but did not raise a defense, so the court's judgment was based on the plaintiffs' complaint. The judgment quoted the plaintiffs as saying that since 2021, JPEX had been promoting in Hong Kong through advertisements, collaborations with internet celebrities such as Lin Zuo, and other means. The plaintiffs had attended Lin Zuo's lectures and read his posts on social media, so they believed that JPEX was a legal and secure investment and trading platform, becoming JPEX users and transferring about 6,220 USDT to JPEX's Wallet. Later, with Lin's invitation code, the plaintiffs purchased USDT from Coingaroo and, under Zhao Jingxian's instructions, transferred 1.85 million Hong Kong dollars to Zhao Jingxian in exchange for USDT. In September 2023, the Hong Kong Securities and Futures Commission warned that JPEX was operating without a license, and JPEX increased the withdrawal fees for users and required prior application for withdrawals. The plaintiffs stated that as of September 2023, JPEX's platform showed that their 3 Wallets held Cryptocurrency assets including JPC (issued by JPEX), BTC, and USDT, with a total value of over 264,000 US dollars (over 2.05 million Hong Kong dollars). However, their withdrawal requests were not approved. The plaintiffs used recognized Blockchain tools to view their Wallets and found that the assets in the 3 Wallets did not match what JPEX's platform displayed. Without their consent, the defendants transferred the assets in their Wallet to a Wallet controlled by unknown individuals outside the JPEX website; the assets in their 3 Wallets were left with only about 0.01 USDT, and they never held any JPC or BTC. After the Hong Kong Securities and Futures Commission issued another warning, JPC was delisted from different exchanges, JPEX also suspended trading, and all users were unable to withdraw their assets. JPEX later claimed that, with the majority of users' votes, they would implement a Dividend scheme, converting the BTC and USDT in the Wallets to JPC without the plaintiffs' consent. However, as JPEX suspended trading and JPC could not circulate in exchanges, JPC had no actual value. The judge ruled that the defendants must return the assets. The judge believed that many common law jurisdictions, including Hong Kong, had accepted that Cryptocurrency is 'property' and can be held in trust, and JPEX provided a platform for users to transfer assets, retained the 'Private Key' of the Wallet, recorded transaction details and amounts, and used customers' assets externally. Therefore, the judge adopted the plaintiffs' argument and determined that the defendants managed the plaintiffs' USDT in an 'express trust' manner. The judge cited cases to point out that JPEX had the responsibility to transfer and safeguard the assets according to the plaintiffs' instructions, but transferred the plaintiffs' USDT to an unknown Wallet without authorization and ignored the plaintiffs' requests to withdraw money, hence the defendants violated their trust obligations. The judge stated that the plaintiffs' arguments were clear and compelling, and for the sake of justice, the court must declare and order the defendants to refrain from processing their assets without their consent, assist the plaintiffs in retrieving the entrusted 240,000 USDT assets, and the defendants must also pay the plaintiffs' 120,000 Hong Kong dollars in litigation costs. Will the victims' claims see the light of day? The outcome of this judgment may trigger a chain reaction. With the first successful civil claim against JPEX, other victims may be encouraged to file lawsuits and demand compensation from JPEX. However, even if the court rules that JPEX must compensate all victims, whether the funds detained by JPEX in Hong Kong are sufficient to compensate all victims is another matter. Related reports: The rise and fall of Coin Young Master: Hong Kong streets, selling mining machines, and then the JPEX fraud case...until the global arrest warrant Hong Kong's 'Coin Young Master' wanted by Interpol worldwide, fled overseas Nine months later》Victims of JPEX fraud file the first civil lawsuit: claiming 1.85 million Hong Kong dollars 〈JPEX victims win the lawsuit! Court orders the return of 240,000 USDT, will the claims see the light of day?〉This article was first published on BlockTempo by BlockTempo, the most influential Blockchain news media.