Dubai-based cryptocurrency exchange, JPEX, has found itself entangled in a liquidity crisis, prompting a series of actions that have stirred controversy within the cryptocurrency community.
In a blog post on September 17, JPEX attributed this crisis to what it termed as “unfair treatment” by certain institutions in Hong Kong, compounded by negative news coverage.
The exchange claimed that these factors led to its third-party market makers freezing funds and demanding additional information for negotiation, thus restricting liquidity and increasing operational costs to unsustainable levels.
In response to this predicament, JPEX announced the delisting of all operations affiliated with its Earn product, effective September 18.
This decision prevents users from initiating new Earn orders, allowing only existing orders to continue until their respective product end dates.
While regular spot trading activities remain unaffected for now, reports have emerged that JPEX is imposing a hefty 999 Tether withdrawal fee, capped at 1,000 USDT, further unsettling its user base.
JPEX, however, did not provide a direct explanation for the high withdrawal fee but assured users that it plans to gradually restore normal withdrawal fee levels once negotiations with third-party market makers conclude.
The exchange stated its commitment to reclaiming liquidity from these market makers and promised to share the revised withdrawal fee details after these negotiations.
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Additionally, JPEX revealed plans to utilize a decentralized autonomous organization (DAO) to gather suggestions from users on its restructuring efforts.
This move reflects the exchange’s desire to engage its community in reshaping its future direction.
Despite these announcements, JPEX has faced scrutiny from regulators.
On September 13, the Hong Kong Securities and Futures Commission (SFC) issued a warning against JPEX for allegedly marketing its services to Hong Kong residents without obtaining the necessary license.
The SFC highlighted various irregularities in JPEX’s practices, including offering exceptionally high returns and other discrepancies in its marketing strategies.
Concerns deepened as an attendee at the Token 2049 conference in Singapore reported that the JPEX booth had been abandoned shortly after the SFC’s warning was issued.
Subsequently, local authorities in Hong Kong received numerous complaints about the exchange, further intensifying the regulatory scrutiny surrounding JPEX’s operations.
As this situation unfolds, the cryptocurrency community and regulatory bodies continue to closely monitor developments with JPEX, with both sides eager to see how the exchange addresses its liquidity crisis and regulatory issues.
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