Crypto exchange JPEX has pointed the finger at its third-party market makers for “maliciously” freezing funds which led to the exchange being forced to hike withdrawal fees to battle a liquidity crisis.
Dubai-based cryptocurrency exchange JPEX has slammed regulators and “third-party market makers” for a liquidity crisis that has seen the platform hike withdrawal fees and suspend certain operations.
In a Sept. 17 blog post, JPEX said “unfair treatment” from certain institutions in Hong Kong, along with negative news — caused its third-party market makers to “maliciously” freeze funds.
“They demanded more information from the platform for negotiation, restricting our liquidity and significantly increasing our daily operating costs, leading to operational difficulties.”
Blaming the liquidity crisis, JPEX announced that all operations affiliated with its Earn product would be “delisted” by Sept. 18. Users will no longer be able to place any new Earn orders and existing Earn orders will only continue until the product end date, it said.
Regular spot trading activity appears to remain functional at the time of publication, however, JPEX users are alleging that the platform is currently charging a 999 Tether (USDT) fee for withdrawals, on a maximum amount of 1,000 USDT.
JPEX did not specifically address the high withdrawal fee but pledged to gradually adjust the withdrawal fees "back to normal levels" after it finishes negotiations with the third-party market makers.
“We promise to recover liquidity from third-party market makers as soon as possible and gradually adjust the withdrawal fees back to normal levels,” JPEX said in a statement, noting the details will be announced after negotiations conclude.
In addition to shuttering its Earn product, JPEX announced that it would be using a decentralized autonomous organization (DAO) to collect suggestions regarding its restructuring from users.
Cointelegraph contacted JPEX but did not receive a response by the time of publication.
Related: Hong Kong central bank warns against crypto firms using banking terms
On Sept. 13, the Hong Kong Securities and Futures Commission (FSC) issued a warning against JPEX for allegedly promoting its services to Hong Kong residents despite not having applied for a license in the country.
In a statement, the SFC wrote that it had observed a “number of suspicious features” concerning the practices of JPEX, including offering very high returns and other discrepancies in how it had marketed itself to the Hong Kong public despite being unlicensed.
An attendee of the Token 2049 conference in Singapore claimed that the JPEX booth at the event had been abandoned the day after the FSC issued its warning.
The Platinum sponsor, JPEX, abandoned their booth at #Token2049 on the second day.
— J O Y (@joyxspacelatte) September 14, 2023
On a side note, their logo looks quite similar to FTX. Is that a sign? pic.twitter.com/KZw9o5vNgF
Local police in Hong Kong have now received at least 83 complaints concerning the exchange, according to a Sept. 18 report from the South China Morning Post.
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