Chief Executive John Lee on Tuesday expressed concern about allegations of fraud at the unlicensed JPEX cryptocurrency exchange, saying the saga highlighted the need for tighter regulation on the trading of virtual assets.

His comments came a day after police arrested six people, including social media influencer Lam Chok, as part of their investigation. More than 1,400 people have made reports to the police about the exchange, involving some HK$1 billion in losses.

Speaking to reporters ahead of the weekly Executive Council meeting, Lee said the administration will step up efforts to educate investors, reminding people to only use licensed platforms regulated by the Securities and Futures Commission (SFC).

"Other platforms that are not regulated by the SFC, then there will be a lot of risks. They have to anticipate we will be doing more public education, for investors to know the risks, how investments operate on such platforms, and how our licensing regime will ensure that what platforms are sufficiently regulated for investors to place their investment on," he said.

The CE said the police and the securities regulator will update the media on the case on Tuesday afternoon.

JPEX earlier announced that it was suspending trading, saying "negative news" and "unfair treatment by relevant institutions" had led its partners to freeze funds, resulting in higher running costs and operational difficulties.

The SFC said earlier JPEX had not applied for a licence to operate in Hong Kong, despite its claim to be “a licensed and recognised platform to facilitate the trading of digital asset and virtual currency”.