​​JPEX scandal won’t hurt Hong Kong crypto vision: Financial Secretary

JPEX scandal won’t hurt Hong Kong crypto vision: Financial Secretary

November 2, 2023 Coin Telegraph

Christopher Hui took the stage at Fintech Week and outlined a list of regulatory moves Hong Kong authorities are looking to implement following the JPEX scandal.

The Hong Kong government says the recent $165 million alleged scandal involving crypto exchange JPEX won’t stifle its Web3 vision for the region.

In a Nov. 2 keynote at Hong Kong Fintech Week, the region’s Secretary for Financial Services and the Treasury Christopher Hui said the saga hasn’t affected the government’s plan.

“We’ve been asked many times whether JPEX will affect our determination to grow the Web3 market — the answer is a clear ‘no.’”

Hui was referring to the financial scandal involving the Dubai-based exchange JPEX, where 2,500 locals allege they were allegedly defrauded, prompting the Securities and Futures Commission (SFC) to warn that JPEX was promoting its services locally without a license.

Hong Kong said it would tighten its crypto regulations after JPEX’s alleged actions. Additionally, the SFC set up a task force with the police to deal with illicit crypto exchange activities and updated its policies on crypto sales and requirements.

Hui said “a lot of things are going on on the regulatory front” — part of the government’s future Web3 regulatory framework plan sees the SFC issuing guidance on tokenized securities and the tokenization of SFC-authorized investment products.

*Hui discusses the government’s plans for its Web3 regulatory framework. (Cointelegraph/Tom Mitchelhill)*

Crypto regulations will also be expanded to cover buying and selling “beyond trades taking place on now-regulated trading platforms,” Hui said.

A “much sought after” joint consultation on stablecoins by the Hong Kong Monetary Authority (HKMA) and the Financial Services and the Treasury Bureau is also set to drop soon, which will take feedback from a January HKMA discussion paper.

Reports earlier this year said the HKMA pressured banks to provide services to crypto companies in the religion. Hui said the HKMA will consult the sector on guidance for “banks providing digital asset custodial services.”

Magazine: Chinese police vs. Web3, blockchain centralization continues: Asia Express

Hong Kong’s attitude toward crypto sours after JPEX saga: Survey

October 18, 2023 Coin Telegraph

Allen Huang

41% of respondents said they prefer not to hold virtual assets or cryptocurrencies — up 12 percentage points from an earlier study.

Public attitude towards cryptocurrency in Hong Kong has taken a dive following the JPEX crypto exchange scandal, according to the initial findings of a new survey.

The survey, conducted by The Hong Kong University of Science and Technology’s business school, was to understand how public attitudes toward virtual assets may have been impacted by the JPEX scandal.

The survey was launched on Sept. 28, around 11 days after the allegations toward JPEX were made public, with its results compared against a similar survey conducted between April and May.

While the survey period is set to end on Oct. 20, the results so far found 41% of respondents would prefer not to hold virtual assets — up 12 percentage points from a study conducted in May.

Only 20% of respondents now want to hold virtual assets in the future, down five percentage points from the earlier survey — another sign that Hong Kongers’ sentiment toward the cryptocurrency industry may be souring.

The recent JPEX scandal in Hong Kong has sent shockwaves through the crypto community. A new survey shows how it's affecting trust in the digital asset space.
Thread pic.twitter.com/pmbQdbFAND
— tanjiro (@tanjiroNFTs) October 17, 2023

HKUST acknowledged the second survey came in the “aftermath of an alleged financial fraud” of a cryptocurrency platform last month but didn’t directly refer to JPEX in its report.

Professor Allen Huang, Associate Dean of HKUST’s business school, said the recent financial incident has brought more public attention to the cryptocurrency industry, resulting in a “more conservative investment appetite” of late. He added:

“As virtual assets become increasingly a part of the digital economy, more educational initiatives are needed to enhance public understanding and awareness of the risks and potentials of this emerging field.”

HKUST’s business school said the survey aimed to gauge the attitudes and views of Hong Kong people on virtual asset investment, based on their experiences, intentions and regulatory safeguards.

5,700 people aged 18 and above took part in the first survey, while 2,200 people were surveyed in the second survey between Sept. 28 and Oct. 5.

JPEX allegedly operated a $166 million fraud scheme, which unraveled over several months before Hong Kong authorities publicly declared they were investigating the exchange.

In light of the JPEX saga, the Hong Kong Police Force and the Securities and Futures Commission set up a cryptocurrency-focused working group on Oct. 5 to deal with illicit activities on exchanges.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

JPEX crypto exchange launches asset-lock-up plan, as some users cry foul

October 5, 2023 Coin Telegraph

Coin Telegraph

JPEX has pushed ahead with its DAO Shareholder Dividend Scheme. However, some users claim their assets are being converted without their knowledge.

Embattled crypto exchange JPEX has pushed ahead with a plan that will purportedly transition the platform into a decentralized autonomous organization (DAO) and convert user assets to dividend shares with an incentive to lock them up for two years.

An Oct. 4 announcement from JPEX said voting for its “DAO Shareholder Dividend Scheme” was completed on Sept. 28, claiming that 68% of users voted in favor for the scheme.

The scheme involves letting users convert their currently frozen assets to DAO Stakeholder dividends at a 1:1 ratio, with JPEX offering a repurchase option at 30% of the conversion price after a year and a 100% repurchase after two years.

*Example of JPEX’s DAO dividend scheme repurchase options. Source: JPEX*

In an earlier announcement, JPEX said users who agreed to the scheme will receive dividends from JPEX through new token listing and trading fees and would receive a distribution of JPEX Coin (JPC) — the exchange’s native token — in proportion to shareholder dividends.

The scheme appears to be an incentive for users to keep their funds on the embattled exchange, which has been experiencing liquidity issues.

However, a JPEX user — who was given anonymity — told the South China Morning Post in an Oct. 4 report claims her assets had been converted seemingly without her agreement or prior knowledge.

She claims that she and other users found they could no longer withdraw their assets following JPEX’s announcement to proceed with the plan.

The Hong Kong police and the city’s Securities and Futures Commission have formed a joint task force to crack down on illegal crypto exchange activities. Meanwhile, the JPEX scandal continues to unfold. https://t.co/lOBRNlLs7m
— Cointelegraph (@Cointelegraph) October 5, 2023

“All of my [Tether] USDT and other cryptocurrencies are gone,” the person said. She claimed her assets were converted to JPC — a low liquidity token with few use cases.

“Some other users holding the tokens and other assets have also found them transferred,” the user said. “Given the unknown price and the impossibility of withdrawal, our assets have now become just waste paper.”

It’s not known if the people quoted in the report voted in favor of the plan but some JPEX users previously told the SCMP they’d been forced to accept the plan as there was no option to vote against it on its app.

JPEX did not immediately respond to Cointelegraph’s request for comment.

JPEX’s dividend plan comes amid Hong Kong police arresting multiple people in connection with the exchange as it’s accused of operating an unauthorized crypto platform by the region's securities watchdog.

Hong Kong police say the Dubai-based exchange defrauded at least 2,300 people of $178 million (1.4 billion Hong Kong dollars).

Earlier on Oct. 4, the region's police and securities regulator launched a crypto-focused task force aiming to combat illicit activities by crypto exchanges.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in

Hong Kong police, regulator form crypto task force as JPEX saga unfolds

October 5, 2023 Coin Telegraph

Coin Telegraph

The joint group was established in light of the ongoing crypto scandal in Hong Kong involving the JPEX crypto exchange.

The Hong Kong Police Force (HKPF) and the Securities and Futures Commission (SFC) have set up a crypto-focused working group to deal with illicit crypto exchange activities.

In an Oct. 4 statement, the SFC said the group was formed after a meeting with the HKPF on Sept. 28 amid continuing arrests and developments in connection to the Dubai-based JPEX exchange.

Days before the meeting, 11 people were detained for questioning over their possible role in the JPEX scandal, in which the SFC has alleged the firm has been promoting its services in the region without a license.

The working group’s aim is to enhance monitoring and investigation of illegal activities carried out by Virtual Asset Trading Platforms (VATPs) and will share information on suspicious activities, assess risks of suspicious exchanges, and collaborate on investigations.

Hong Kong’s regulators previously flagged they were looking to tighten crypto market regulations in the wake of the JPEX saga.

The group comprises officials from the SFC's enforcement division and HKPF officials from its commercial, cybersecurity and financial intelligence and investigations bureaus.

In a statement, SFC enforcement director Christopher Wilson said the regulator looked forward to deploying its resources to combat “problematic VATPs and protect the interest of investors.”

Eve Chung, HKPF’s Assistant Commissioner of Police (Crime), said the working group is instrumental in exchanging intelligence and jointly responding to “challenges arising from VATPs, to better protect the general public of Hong Kong.”

The SFC has since published a list of all licensed, deemed licensed, closing down, and application-pending exchange’s along with a list of “suspicious VATPs.”

Magazine: Are DAOs overhyped and unworkable? Lessons from the front lines

Troubled crypto exchange JPEX applies for deregistration in Australia

September 20, 2023 Coin Telegraph

Coin Telegraph

The unlicensed exchange allegedly solicited than $128 million from users before being reprimanded by the Hong Kong Securities and Futures Commission.

Troubled Hong Kong crypto exchange JPEX has applied for deregistration in Australia.

According to a filing seen by Cointelegraph on September 20, Jieyi Chen, director of JP-EX Crypto Asset Platform PTY LTD (JPEX), has filed a deregistration application with the Australian Securities and Investment Commission (ASIC). In the filing, JPEX claims that all members of the company agree to the deregistration, the company is no longer carrying business, its assets do not exceed $1000 Australian Dollars, and carries no liabilities.

On September 13, during the Token2049 conference in Singapore, the JPEX team allegedly abandoned its corporate booth after Hong Kong police arrested six JPEX employees on charges of fraud for operating an unlicensed crypto exchange. The Hong Kong Securities and Futures Commission (SFC) said on the same day that it received over 1,000 complaints regarding the JPEX platform, with claims of losses amounting to over one billion Hong Kong dollars ($128 million).

As the issue became publicized, JPEX reportedly raised its withdrawal fees to 999 Tether (USDT) to prevent transfers out of the exchange. Previously, JPEX had offered yields as high as 30% per annum on stablecoin staking.

The website is currently inaccessible at the time of publication. Shortly before its takedown, JPEX published a compensation plan for users, claiming that users would be reimbursed on a "one-to-one" basis with their assets exchanged for stake in the JPEX DAO by September 21. The exchange also wrote that third-party custodians have "malicious frozen" platform assets due to the SFC investigation and has led to an "unprecedented catastrophe."

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JPEX blames partners for ‘maliciously’ freezing funds, causing liquidity crisis

September 18, 2023 Coin Telegraph

Coin Telegraph

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.

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.

On a side note, their logo looks quite similar to FTX. Is that a sign? pic.twitter.com/KZw9o5vNgF
— J O Y (@joyxspacelatte) September 14, 2023

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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JPEX Announces Partnership Extension with Western Sydney Wanderers

September 18, 2022 Bitcoin.com

JPEX

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