A court in Hong Kong has ruled in favor of two investors who filed a civil suit against the defunct JPEX cryptocurrency exchange and an associated Hong Kong business. This was the first suit in what has been called Hong Kong’s biggest alleged financial fraud case.

Hong Kong District Court Judge Grace Chow Chiu-man entered a declaratory judgment in favor of the plaintiffs, meaning the case will not go to trial.

She ordered 1.85 million Hong Kong dollars ($238,000) to be recovered on behalf of plaintiffs Herbert Lee Sung-him and Chan Wing-yan in the form of 247,000 USDt

The defendant didn’t appear

Lee and Chan filed suit against Dubai-based JPEX , the local Web3 Technical Support and other parties in June. They claimed that Chan had made three transfers of USDt to JPEX wallets in July and August 2023.

One of those transfers was in Lam’s name. The cryptocurrency was transferred out of their wallets almost immediately, and they were unable to recover it.

JPEX is no longer active. Web3 Technical Support did not send a representative to the hearing. The judge concluded:

“As for the injunction sought against D2 [Web3 Technical Support], I am also satisfied that it is necessary and ancillary to assist in the recovery of the USDT Deposits, which I have held on the Ps’ [plaintiffs’] pleaded case were held on trust by D2 (together with D1 [JPEX]) for P1 [Chan].”

Web3 Technical Support will be charged approximately $15,400 in court costs as well.

Joshua Chu Kiu-wah, who represented the plaintiffs, told The South China Morning Post that they would next seek an enforcement action to recover the funds, which have been frozen by the police.

“With thousands of victims in the play, it is a logistics challenge to get through. And waiting too long risks running into the issue of statute of limitation,” Chu told Cointelegraph.

Related: Hong Kong to list ‘suspicious’ crypto platforms in wake of JPEX scandal

Not the last case against JPEX

The scandal around JPEX began in September 2023 when the Hong Kong Securities and Futures Commission issued a warning that the exchange was operating without a license. Hong Kong police subsequently received over 2,200 complaints against the exchange and numerous arrests were made, including of influencers and celebrities who endorsed the exchange.

JPEX imposed prohibitive withdrawal fees to retain clients and attempted to convert itself to a decentralized autonomous organization (DAO) by converting user funds into “DAO shareholder dividends.”

In all, there are thought to be 2,600 victims in the case, who lost a total of $206 million. More court actions are expected.

Magazine: JPEX staff flee event as scandal hits, Mt. Gox woes, Diners Club crypto: Asia Express