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The subsequent arrests of platform operators and numerous high-profile influencers have exposed a new and hazardous regulatory environment for influencers, marketing agencies, and maybe even licensed corporations that associate with them. The red lines between marketing and criminal conduct are now being drawn by prosecutors. This incident not only highlights vulnerabilities in investor protection but also marks a pivotal moment in how Hong Kong authorities will police the promotion of high-risk investments.
This development does not exist in a vacuum. It echoes the enforcement trend on financial commentators we analysed in our recent newsletter, “What ‘Finfluencers’ should not do. The SFC is Watching!“. In that article, we detailed the SFC’s crackdown on individuals carrying on a business of “advising on securities” (i.e. Type 4 regulated activity) without a licence, a crackdown that resulted in the first-ever custodial sentence for an unlicensed ‘finfluencer’.
The JPEX case involves a different legal framework—the virtual asset service provider (“VASP”) regime under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (“AMLO”)—but the policy goal is identical: to stamp out the unlicensed promotion of high-risk investments to the public. The legal “traps” , however, are new and much more expansive.
The New Offences: From SFO ‘Finfluencers’ to AMLO ‘Promoters’
The key legal distinction is the underlying asset. The ‘finfluencer’ prosecutions relate to providing advice on securities (stocks), which is a licensed activity under the Securities and Futures Ordinance (“SFO”).
The JPEX platform, however, primarily dealt in virtual assets, such as Bitcoin. Therefore, the promoters’ liability stems from the new VASP regime under the AMLO. This regime introduces specific criminal offences that directly target promoters.
- The Advertising Offence: Promoting the Unlicensed
Under the new AMLO VASP regime, it is a specific offence for any person to “issue advertisements” of an unlicensed VASP to the Hong Kong public.[3]
Hence, as long as the VASP is to the promoter’s knowledge unlicensed, a mere disclaimer of “this is not financial advice” is useless. The question that matters is: “Is the platform licensed by the SFC?” If the promoter knows that the platform is not on the SFC’s list of licensed VATPs, any promotion of it to the Hong Kong public would be a criminal offence. In the JPEX case, the platform was unlicensed, and its promoters were allegedly making false claims that it had applied for a licence.[4]
- The Anti-Fraud Offence: ‘Fraudulently or Recklessly‘ Inducing Investment
The AMLO has also introduced a powerful new anti-fraud provision: an offence for any person to “fraudulently or recklessly induce others to invest in virtual assets”. This carries a maximum penalty of 7 years’ imprisonment and a HK$1 million fine.[5]
“Fraudulently” is clear: essentially, it means lying, such as by repeating false claims of licensure. The more dangerous word for promoters is “recklessly”.
For “recklessly”, a near-identical provision in the SFO (s. 107) could provide an analogy for interpretation. In this regard, a promoter might act “recklessly” if they:
- Make a forecast that is not justified by facts (e.g., allegedly promoting JPEX’s 21% APY on Ethereum without any basis or diligence); or
- Make a statement that omits a material fact, making it misleading (e.g., allegedly promoting JPEX while failing to disclose the material fact that it was unlicensed and on the SFC’s Alert List).
This provision effectively nullifies the “DYOR” (Do Your Own Research) disclaimer. The law now places the burden on the promoter to conduct their own diligence. Promoting an unlicensed, high-yield product without verifying its claims, could well fall within the definition of recklessness.
- Conspiracy to Defraud
Finally, promoters may be charged with the common law offence of ‘conspiracy to defraud‘. This charge, which carries a maximum sentence of 14 years[6], may apply where there is an agreement to use dishonest means to put investors’ economic interests at risk.
When a promoter agrees with an unlicensed platform to read a misleading script, promote unjustified returns, and drive public investment, the prosecution can argue they are no longer a marketer, but rather a co-conspirator.
What This Means for You
The parallel enforcement actions under the SFO (for securities) and the AMLO (for virtual assets) appear to reveal a new, unified regulatory posture:-
- For Influencers and KOLs: The “I’m just a marketer” is likely to be a very weak defence. Finfluencers may now be regarded as a gatekeeper with a duty of diligence. Promoting any financial product or platform without first verifying its licence status and the factual basis of its claims could expose them to severe criminal liability.
- For Licensed Corporations (LCs): As detailed in our finfluencer newsletter, LCs’ responsibility for the agents engaged is crucial. LCs may need to consider whether their internal controls should now include due diligence on an influencer’s entire public profile, including their virtual asset promotions. Engaging an influencer who is recklessly promoting an unlicensed VASP may put the LCs’ “fit and proper” status and internal controls into question.
- For Marketing and PR Agencies: By contracting with a platform like JPEX and engaging influencers on its behalf, marketing and PR agencies may bear the risk of being an aider, abettor, or co-conspirator to a criminal offence. Marketing and PR agencies need to consider whether their client-onboarding process should now include a legal and regulatory compliance check, starting with the SFC’s public registers.
With the now expanded regulatory perimeter, all parties must ensure they do not cross the line between marketing and criminal solicitation. It is vital that all entities in this ecosystem review their compliance frameworks, influencer engagement policies, and client onboarding processes immediately.
At Stevenson, Wong & Co., our regulatory and compliance team has extensive experience advising clients on their obligations under both the SFO and the new AMLO VASP regime. To discuss how these new risks impact your business, please contact our Ms. Rainbow Ip or Mr. Kenneth Leung.
[1] https://news.rthk.hk/rthk/en/component/k2/1830269-20251105.htm
[2] https://www.acrc.hku.hk/Case/Detail/2212
[3] AMLO s 53ZRE
[4] https://www.sfc.hk/en/News-and-announcements/Policy-statements-and-announcements/Statement-on-JPEX
[5] AMLO s 53ZRG
[6] Crimes Ordinance (Cap. 200) s 159C(6)
This news update is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.