JPEX | Media hastily deletes articles, spokesperson remains unresponsive! False advertising may lead to civil compensation, criminal fraud

The JPEX exchange in Hong Kong has been warned by regulators for the second time, leading to restrictions on withdrawals and causing a wave of users seeking compensation. Victims are questioning, "Are those people not held accountable?" Some media outlets that were involved in advertising have started deleting articles, and spokespersons like Chen Linjiu have not responded publicly.

This article discusses the penalties that may be faced for "false advertising," as well as whether labeling a "disclaimer" in the media really exempts them from collecting advertising fees.

JPEX Taiwan Promoters: Media Hurriedly Deletes Articles, Spokesperson Chen Lingjiu Remains Unresponsive

The cryptocurrency information page "Raysky" recalled the JPEX exchange incident, as well as the negative reactions it previously received due to community warnings. It's believed that the high number of investors in JPEX cannot be blamed entirely, as the prior publicity was truly extensive:

"They hired Chen Lingjiu as the brand ambassador for promotion, had a significant presence with a blockchain building in Taipei, Kobi Trust conducted physical seminars with strong appeal, Zhong Peisheng sponsored events vigorously, Dong Qu constantly issued press releases for wider publicity (heard they started deleting news), Tony from CoinSide, Jumping Tiger OTC threatened to sue those who spoke ill of JPEX, Figures three and four..."

Faced with overwhelming publicity, the affected interviewees believe that these "JPEX Taiwan promoters" should be held responsible for the case, as they are public figures or organizations. Although there have been cases like FTX where lawsuits against spokespeople were successful, the question remains whether Taiwan has the legal jurisdiction to address such matters.

Responsibility of Online Media: Taiwan Amends Law to Combat Online Investment Frauds

In May of this year, the Taiwanese Legislative Yuan passed the "Amendment to the Securities Investment Trust and Consulting Act," regulating entities like "online media" that publish advertisements related to securities investment or business solicitations. Such advertisements must disclose the agency responsible for publication, investors, and other relevant information.

If online platforms publish illegal advertisements that mislead or defraud consumers, they are jointly liable with the agency responsible for publication and investors for damages.

Current regulations state that failure to remove illegal investment advertisements within the specified period, restrict viewing, cease broadcasting, or take other necessary actions may result in fines ranging from NT$120,000 to NT$600,000, with a deadline for improvement; failure to comply may lead to penalties doubled to five times until compliance.

Note: Since July 8, 2022, the Hong Kong Securities and Futures Commission has listed JPEX on the unlicensed companies and suspicious websites list, sparking widespread discussion in the community, as Taiwanese operators claim they were unaware.

Given that JPEX's operations include derivatives and financial products, both falling under securities investment or business, further clarification is required from the Taiwanese judiciary.

Fair Trade Law Imposes Penalties on Advertisers: Compensation and Joint Liability

According to the Fair Trade Act, advertising agencies or media outlets that knowingly create misleading advertisements bear joint liability with the advertiser. Similarly, endorsers who knowingly participate in misleading endorsements also share liability with the advertiser.

However, in the case of endorsers like Chen Lingjiu and the media, as prominent public figures and organizations, they are not subject to the tenfold compensation limit applicable to endorsers who are not well-known public figures, professionals, or institutions.

The regulatory authority may order offending businesses to cease, correct their behavior, or take necessary corrective measures within a specified period, imposing fines ranging from NT$50,000 to NT$25 million.

Note: Since July 8, 2022, the Hong Kong Securities and Futures Commission has listed JPEX on the unlicensed companies and suspicious websites list, sparking widespread discussion in the community, as Taiwanese operators claim they were unaware.

Are "Disclaimers" Effective?

Under the Consumer Protection Act and the Civil Code, the effectiveness of disclaimers is explained. Disclaimers are deemed invalid if they violate good faith principles, involve intentional or gross negligence, attempt to shift responsibility to the other party, or if they violate the rights of the other party, even if disclaimers are present, the parties still have the right to pursue liability.

Article 12, Paragraph 1 of the Consumer Protection Act: "Terms in standardized contracts that violate good faith and are grossly unfair to consumers are void."

Article 222 of the Civil Code: "Liability for intentional or gross negligence cannot be waived in advance."

Article 247-1 of the Civil Code: "In contracts where one party sets terms for the same type of contract, if the provisions are grossly unfair, including clauses that exempt or reduce the liability of one party, increase the liability of the other party, require the other party to waive rights or limit the exercise of rights, or impose significant disadvantages on the other party, those provisions are void."

Cryptocurrency Pitfalls Abound, Advertisers and Endorsers Must Exercise Caution

With unclear regulations in Taiwan and abroad for cryptocurrency operators lacking licenses and detailed regulations to follow, celebrities and advertisers may find it challenging to discern the truth when presented with suspicious overseas advertisements. They may also be tempted by financial gains and take risks. If unlawful activities occur with the advertiser, endorsers may suffer joint liability. Accepting advertisements with knowledge of the situation could exacerbate penalties, necessitating caution.

Note: Disclosure of interests - before JPEX entered the Taiwanese market, in March and June 2022, two articles were published under the guise of sponsored content, detailing JPEX's collaboration with a football club and talent recruitment news, which have since been taken down following significant feedback from readers in Hong Kong, and there is no longer any commercial relationship.