Dubai-based cryptocurrency exchange JPEX has laid blame on regulators and third-party market makers for a recent liquidity crisis that forced the platform to increase withdrawal fees and halt certain operations.
In a blog post dated September 17, JPEX attributed its liquidity issues to what it termed “unfair treatment” from specific institutions in Hong Kong. Negative news surrounding the exchange contributed to third-party market makers freezing funds, a move JPEX labeled as “malicious.”
According to JPEX, these market makers demanded additional information during negotiations, which restricted liquidity and substantially raised daily operating costs, leading to operational challenges for the exchange.
To address the liquidity crisis, JPEX announced the delisting of all operations associated with its Earn product by September 18. Consequently, users would no longer be able to place new Earn orders, and existing ones would only continue until their scheduled end date.
While regular spot trading activities seem unaffected, JPEX users raised concerns about the exchange charging a 999 Tether fee for withdrawals, with a maximum limit of 1,000 USDT. JPEX did not explicitly address the high withdrawal fee but pledged to gradually return the fees to “normal levels” following negotiations with third-party market makers. The details of this adjustment would be communicated once negotiations concluded.
Additionally, JPEX disclosed plans to use a decentralized autonomous organization (DAO) to gather user suggestions regarding its restructuring.
On September 13, the Hong Kong Securities and Futures Commission (FSC) issued a warning against JPEX for allegedly promoting its services to Hong Kong residents without obtaining the required license. The FSC expressed concerns about the exchange’s high-return offerings and marketing practices despite its unlicensed status. Following the FSC’s warning, reports emerged that the JPEX booth at the Token 2049 conference in Singapore had been abandoned.
As of September 18, local Hong Kong authorities had received at least 83 complaints related to the exchange, as reported by the South China Morning Post.