After the crypto sector went into a full-blown meltdown last year, cryptocurrency executives hoped, with fingers crossed, that 2023 would herald a new beginning. But the situation has worsened, with the industry facing aggressive regulatory crackdowns.
Dubai-based cryptocurrency trading platform JPEX is the latest firm to be ensnared in a crackdown on allegedly illegal crypto activity. The crypto exchange has suspended trading due to an ongoing probe by the Hong Kong police and the city’s financial watchdog.
In a blog post on Sunday, the exchange said, “Recently, due to the unfair treatment by relevant institutions in Hong Kong towards JPEX, a cryptocurrency trading platform, and a series of negative news, our partnered third-party market makers have maliciously frozen funds. They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties.”
Owing to these liquidity challenges, JPEX said users won’t be able to place new orders on its Earn Trading interface, effective September 18, while existing orders on Earn Trading will continue until the product’s maturity. The exchange further stated that it was negotiating with third-party market makers to address the liquidity shortage, and was mulling over restructuring its business as a Decentralized Autonomous Organization.
Some JPEX users have also slammed the platform for charging exorbitant fees–pointing out the JPEX is levying a 999 Tether (USDT $1.00) fee for withdrawals, on a maximum amount of 1,000 USDT. Responding to the complaints, the exchange has vowed to bring the withdrawal fees “back to normal levels” once negotiations with third-party market makers are done.
The development comes amid an ongoing investigation into JPEX by the Hong Kong police and Hong Kong Securities and Futures Commission (SFC). The crypto exchange has allegedly been “misleading investors” about having applied for a virtual asset trading platform (VATP) license in Hong Kong.
“No entity in the JPEX group is licensed by the SFC or has applied to the SFC for a license to operate a VATP in Hong Kong,” the SFC said in a statement last week.
According to its website, JPEX is headquartered in Dubai and licensed by securities authorities in Australia. Hong Kong police have reportedly received a barrage of complaints against JPEX, with assets worth HK$34 million ($4.3 million) under the scanner. In the latest development, well-known influencer Joseph Lam Chok was arrested by the local police in Hong Kong.
It’s worth mentioning that Hong Kong, earlier this year, embraced digital assets, hoping to bolster its status as a financial hub. However, over the past few months, it has ramped up its oversight of the crypto sector. Just last week, the Hong Kong Monetary Authority warned the public to be wary of cryptocurrency firms falsely describing themselves as “banks”—and their offerings as “deposits.”