The freezing of funds on Hong Kong-based crypto exchange JPEX shows the need for strong crypto licensing laws, the territory’s leader, John Lee, told reporters Tuesday.

Hong Kong police arrested six people including two social media influencers after more than a thousand complaints involving a total of $128 million were filed about the exchange, the South China Morning Post reported Monday.

“This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed" and regulated by the Hong Kong Securities and Futures Commission (SFC), Lee said according to remarks published on his website. “We will be doing more public education for investors to know the risks.”

The SFC accused JPEX of operating without a license, and the crypto exchange has said its “unfair” treatment by regulators could jeopardize Hong Kong’s ambitions to become a Web3 hub.

While some are concerned about a tighter grip that could potentially be imposed by crypto-skeptic Beijing, Hong Kong’s regime has been compared favorably with those such as the U.S. that don’t offer the same regulatory clarity, by companies such as Ripple.

Regulations Hong Kong

Jack Schickler

Jack Schickler was a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He previously wrote about financial regulation for news site MLex, before which he was a speechwriter and policy analyst at the European Commission and the U.K. Treasury. He doesn’t own any crypto.