21st September 2023 – (Hong Kong) In a recent development, JPEX, a controversial cryptocurrency exchange, has come under scrutiny from the Securities and Futures Commission (SFC) of Hong Kong. The SFC criticised JPEX for engaging in improper practices, leading to an investigation by the police’s Commercial Crime Bureau. As of today, a total of 11 individuals have been arrested in connection with the case.
Despite the ongoing investigation, JPEX has emphasised its commitment to continue operating. In a recent announcement on the 20th of September, the exchange introduced a new initiative called the “DAO Stakeholders Dividend Plan.” This plan allows users to participate in a user referendum on the 21st of September. If approved, users will have the opportunity to subscribe to “stakeholder dividends” by utilising their account assets. However, it’s important to note that the value of these dividends is only equivalent to 1% of the original assets, representing a significant decrease of 99%. Users will have to wait for two years before the platform can repurchase these dividends at their full original value.
In an effort to attract new users and increase capital inflow, JPEX has also announced that users who deposit new assets can receive double the stakeholder dividends. The exchange further clarified that if the plan is approved, adjustments will be made by the 1st of May 2024, including a change in the withdrawal fee for Tether (USDT) to 3 USDT.
However, financial experts have expressed concerns about JPEX’s intentions, viewing their plan as a deliberate delay tactic and likening it to a “second scam.” They caution against further investment in the platform and recommend that the police promptly contact Tether to freeze JPEX’s assets on the blockchain.
JPEX’s statement acknowledges the significant impact of the SFC’s actions on their platform. They describe the situation as an unprecedented predicament caused by third-party market makers locking up funds. Despite the challenges, JPEX assures its users that they are committed to resolving the situation promptly and working closely with them during this difficult time.
The “DAO Stakeholders Dividend Plan” is presented as a solution inspired by successful approaches used by international trading platform Bitfinex. JPEX aims to distribute 49% of the dividends to stakeholders, amounting to approximately 400 million USDT. The exchange also highlights additional benefits for stakeholders, such as revenue from token listing fees, transaction fees, and the distribution of platform coins (JPC). They further state that the daily earnings of USDT in the JPC revenue pool will be distributed to stakeholders based on the proportion of DAO Stakeholder dividends.
To ensure transparency and user participation, JPEX said it has scheduled a user referendum on the 21st of September 2023. Users can vote on the implementation of the “DAO Stakeholders Dividend Plan” on a dedicated referendum page. The exchange aims to share profits with all users, fostering a sense of collective responsibility and collaboration to improve the platform’s operational strategy.
Despite the challenges faced by JPEX, said it remains committed to providing uninterrupted services to their users. They encourage users to access their platform through the mobile application or web version using VPN applications like Surfshark to bypass the unreasonable blocking imposed by Hong Kong’s telecommunications service providers.
JPEX acknowledges the regrettable circumstances surrounding the recent challenges, including the blocking of their mobile application and official website by the Hong Kong authorities. They express disappointment in the SFC’s accusations, stating that they have always strived to comply with regulations and provide a quality trading environment for users. JPEX believes that the SFC’s actions demonstrate prejudice and unfair treatment towards its platform.
JPEX’s latest scheme appears to send a message to its users, saying, “Don’t take away your assets, keep them with us for now,” but the objective outcome will only give JPEX more time and space to prepare for the next steps.
However, a financial expert believes that the suggestion of injecting new assets to receive double “dividends” is misleading and akin to creating a “second scam.” He describes it as encouraging users to add new funds on top of their existing principal, making it seem like a profitable opportunity. He compares this tactic to squeezing every ounce of value from each victim, leaving nothing behind.
The financial expert states that despite JPEX’s continuous rebuttals against the Securities and Futures Commission (SFC) and its claims of maintaining “healthy operations,” its recent actions, including the introduction of the aforementioned scheme, reflect the platform’s confidence in itself. It’s an attempt to “take you down one last time” before the SFC and the police, who are currently investigating, can take further action. The financial expert emphasises that it is unreasonable to continue depositing money into the platform and increasing losses while authorities are actively involved.
During a press conference held on Tuesday, 19th September, the police and the SFC provided updates on their actions against JPEX. When asked about the mastermind behind the operation, the police stated that the investigation is still ongoing.
The financial expert also highlights the complexity of this case. Since the authorities’ intervention, the arrested individuals are mainly connected to cryptocurrency exchange shops, and the mastermind behind JPEX has yet to be found. However, the financial expert suggests that there is evidence of JPEX manipulating Tether (USDT) on the blockchain, and at this stage, the SFC and the police can contact Tether to freeze these funds.