- Dubai-based crypto firm JPEX has accused Hong Kong regulators and its partners of unfair treatment.
- The exchange claims third-party market makers froze its funds, leading to a liquidity crisis.
- The crisis led to the exchange raising its withdrawal fee of 999 USDT on a maximum transaction of 1000 USDT.
JPEX crypto exchange is, without doubt, blaming its third-party market makers squarely for “maliciously” freezing funds, which led to the exchange being forced to hike withdrawal fees to battle a liquidity crisis.
In a post on Sep 17, the Dubai-based exchange JPEX alleged that the “unfair treatment” by certain Hong Kong institutions and negative press led its third-party market makers to “maliciously” lock up funds. Part of the post read,
” They demanded additional information from our platform during negotiations, constraining our liquidity and significantly elevating our daily operational expenses, thereby leading to operational challenges.”
Citing the liquidity crunch, JPEX asserted that by Sept 18, all operations related to its Earn product would be eliminated. As a result, users can no longer create new Earn orders, and existing ones will only continue once the product expires.
However, as of the time of publication, standard spot trading activity seems to be unaffected; however, allegations have arisen from JPEX users, claiming that the platform is presently imposing a 999 Tether fee for withdrawals, subject to a maximum amount of 1,000 USDT.
On the other hand, JPEX has not explicitly commented on the high withdrawal fee. However, it has promised to gradually adjust the withdrawal fees “back to normal levels” after it finishes negotiations with the third-party market makers. JPEX said in a statement,
“We promise to recover liquidity from third-party market makers as soon as possible and gradually adjust the withdrawal fees to normal levels.”
It further noted that the details will be announced after the negotiations.
JPEX announced that it would use a decentralized autonomous organization (DAO) to collect suggestions regarding its restructuring from users, in addition to discontinuing its Earn product.
Hong Kong’s Market Watchdog Raises Red Flags Concerning JPEX.
Earlier this month, Hong Kong warned investors against crypto firms posing as banking institutions. The Securities and Futures Commission (SFC) on Sep 13 called out crypto company JPEX for advertising itself as a licensed firm despite not being authorized.
SFC pointed out in a statement that a “number of suspicious features” related to JPEX’s practices, including offering exceedingly high returns and inconsistencies in its marketing approach to the Hong Kong public despite operating without a license.
An attendee of the Token 2049 conference in Singapore claimed that the JPEX booth at the event had been abandoned the day after the SFC issued its warning.
Notably, a Sep 18 report from the South China Morning Post indicated that the local police in Hong Kong had received at least 83 complaints concerning the exchange.