JPEX Crypto Exchange Faces Liquidity Crisis
JPEX blames regulators and third-party market makers for liquidity crisis, delists Earn product. Users report excessive withdrawal fees.
JPEX recently pointed fingers at regulators and third-party market makers for its ongoing liquidity crisis. In a blog post dated September 17, the exchange cited "unfair treatment" from certain Hong Kong institutions and negative press as the primary reasons behind its third-party market makers deciding to freeze funds. The exchange described these actions as "malicious," stating that these market makers demanded more information for negotiation, which restricted JPEX's liquidity and escalated its daily operational costs.
"They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties."
As a direct consequence of the liquidity challenges, JPEX made the tough decision to delist all operations related to its Earn product by September 18. This means users won't be able to place any new orders related to the Earn product. Existing orders will only persist until their respective end dates. While regular spot trading activities seem to be functional, there have been reports from users about excessive withdrawal fees. Some users claim that JPEX is charging a whopping 999 Tether USDT fee for withdrawals on a maximum amount of 1,000 USDT.
JPEX, in its defense, has committed to adjusting these withdrawal fees back to standard levels once they conclude negotiations with the third-party market makers. They have expressed their intent to regain liquidity from these market makers as swiftly as possible.
Given these events, JPEX has announced its plans to use a decentralized autonomous organization (DAO) to gather user suggestions about its restructuring.
On September 13, the Hong Kong Securities and Futures Commission (FSC) issued a stern warning against JPEX. The regulatory body accused the exchange of promoting its services to Hong Kong residents without having the necessary license. The FSC highlighted several "suspicious features" related to JPEX's operations. These included offering unusually high returns and discrepancies in its marketing strategies targeting the Hong Kong public, despite lacking the required license.
The Platinum sponsor, JPEX, abandoned their booth at #Token2049 on the second day. ????
On a side note, their logo looks quite similar to FTX. Is that a sign? ???? pic.twitter.com/KZw9o5vNgF — J O Y (@joyxspacelatte) September 14, 2023
This regulatory scrutiny had visible effects. An attendee at the Token 2049 conference in Singapore reported that the JPEX booth at the event was deserted a day after the FSC issued its warning. Furthermore, local Hong Kong police have reportedly received over 83 complaints related to the exchange, as per a report from the South China Morning Post.