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JPEX Faces Liquidity Crisis Amid Regulatory Spotlight

As the cryptocurrency exchange JPEX sinks into a liquidity crisis, a developing narrative of accusations and operational disruptions has emerged. In a recent blog post, the Dubai-based platform blamed regulators and third-party market makers for its current turmoil, identifying their “unfair treatment” and negative press as catalysts for market makers to maliciously freeze funds. The firm claimed that these actions have put considerable pressure on its liquidity, increasing daily operational costs and causing significant operational challenges.

The Impacts: Unprecedented Withdrawal Fees and Suspended Services

As a repercussion of the exacerbated crisis, JPEX has announced a severe increase in withdrawal fees, which have skyrocketed to a staggering amount of 999 USDT with a cap of 1000 USDT, a move that triggered a wave of complaints from the platform’s user base. Although the platform refrained from commenting specifically on the structure of the high fees, it reassured users of prospective adjustments to these fees after negotiations with the concerned market makers. Meanwhile, in an attempt to stem the tide, the firm decided to withdraw all operations related to its Earn product, thus freezing all new orders and allowing existing ones to function only until the predetermined end date of the product.

Due to the restriction of our liquidity by third-party market makers and to comply with policy guidelines, all transactions on our Earn trading interface will be delisted on September 18, 2023.


A Regulatory Spotlight on JPEX Operations in Hong Kong

Adding fuel to the fire, the Securities and Futures Commission of Hong Kong (SFC) shed light on JPEX’s allegedly unauthorized promotion of services to Hong Kong citizens. A statement from the commission highlighted a series of “suspicious characteristics” regarding JPEX’s modus operandi, including offering excessively high returns and noticeable inconsistencies in its marketing strategies. Following this warning, a noticeable absence was observed at the JPEX booth at the Token 2049 conference in Singapore.

The Impacts: Police Complaints and Community Restructuring Initiative

As the crisis deepens, the South China Morning Post reported on September 18 that at least 83 complaints against the exchange had been filed with the local police in Hong Kong. Meanwhile, JPEX is moving towards a restructuring process, seeking input from its user community through a decentralized autonomous organization (DAO), a gesture indicating its intention to rebuild trust and restore normalcy in its operations.

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