JPEX, a crypto exchange based in Hong Kong, has recently found itself at the center of numerous complaints and investigations. According to reports, as of Friday, the exchange has been named in at least 83 complaints to the Hong Kong police, involving cryptocurrencies worth $4.3 million. This surge in complaints has prompted an official police report against JPEX by the Hong Kong Securities and Futures Commission (SFC). The police’s commercial crime bureau is now diligently investigating the matter.
The controversy surrounding JPEX intensified after the SFC issued a statement on September 13, warning Hong Kong users about the exchange’s operation without a license. In its statement, the SFC highlighted several duplicitous and misleading claims made by JPEX. The exchange falsely claimed to be “licensed” by overseas regulators, particularly the Virtual Assets Regulatory Authority of Dubai (VARA). However, it was revealed that JPEX is not listed among VARA’s licensed virtual assets service providers.
Moreover, the SFC pointed out the exceptionally high returns offered by JPEX for certain products. For instance, JPEX advertised a 21% annual percentage yield for Ethereum (ETH), 20% for Bitcoin (BTC), and 19% for USD Coin (USDC). Such returns raised eyebrows as they seemed too good to be true.
Further scrutiny by the SFC revealed that JPEX’s yield-generating products, such as ‘Earn’ and ‘Savings,’ are not permitted under Hong Kong’s crypto regulatory regime. Additionally, JPEX made false claims about receiving funding from a Hong Kong-listed company, which the SFC denounced as misleading.
The SFC also called out key opinion leaders who had been promoting JPEX and making false claims about the exchange’s application for a crypto license in Hong Kong. The commission stressed the importance of accurate information dissemination and urged these individuals to cease their endorsements.
Multiple retail investors have reported difficulties in withdrawing their assets from JPEX. Some have experienced reduced or altered balances, while others had their withdrawal requests met with excessive processing fees. A screenshot shared in a Telegram group dedicated to JPEX-related complaints depicted a withdrawal request for 1,000 Tether (USDT) tokens, resulting in only 25 USDT being received, with the remaining amount labeled as a “processing fee.”
The administrator of the Telegram group acknowledged receiving over 200 “serious” complaints involving more than $10 million worth of crypto. These complaints further aggravated the ongoing controversy surrounding JPEX.
Responding to the SFC’s statement, JPEX accused the agency of unfairly undermining the exchange. The exchange argued that it is still in the “preparation phase” and is yet to submit its license application, questioning the legitimacy of the SFC’s claims. JPEX suggested that the SFC’s actions reflect a lack of commitment to the implementation of Web 3.0 policies in the cryptocurrency industry.
In an unexpected turn of events, JPEX employees allegedly abandoned their booth at the Token2049 event in Singapore. This occurred despite the exchange’s assurance of active participation. Subsequently, JPEX adjusted the withdrawal fee for USDT, presumably in response to the SFC’s comments.
JPEX announced the formation of a special task force to reassess its policies and future directions. The exchange aims to increase the withdrawal limit in the coming days, as revealed by a screenshot posted by a user.
The controversy surrounding JPEX’s operation without a license, misleading claims, and user complaints highlights the importance of regulation and due diligence in the crypto industry. Users and investors must exercise caution when dealing with crypto exchanges, ensuring that they operate within legal frameworks. Additionally, regulators play a crucial role in monitoring and taking action against deceptive practices in the industry.
As the investigation into JPEX continues, it remains to be seen how the situation will unfold. However, this case serves as a stark reminder of the risks associated with unregulated or improperly regulated crypto exchanges, emphasizing the need for increased scrutiny and transparency.