Japan-based crypto exchange JPEX said it will pause a major feature at the start of the week in an announcement published on September 17.
JPEX said it will cancel all Earn Trading transactions on September 18. Like other staking or earn services, this feature allowed users to deposit assets and provide liquidity in exchange for rewards. During the service freeze, users will not be able to place new earning orders, but existing orders will continue to generate rewards until their end date.
The service suspension does not appear to apply to all trading on JPEX, contrary to a report from the South China Morning Post citing the same blog post.
Nevertheless, the problem appears to extend beyond the affected Earn service. In its latest announcement, JPEX said complaints from Hong Kong authorities have led to its third-party market maker partners freezing their funds. These broken relationships have in turn led to reduced liquidity, increased operating costs and operational problems at JPEX.
The company said it is working with its partners to restore liquidity, but would not disclose further details until negotiations are completed.
The service stop follows other developments
JPEX’s latest service reduction is just the latest event in a series of developments involving JPEX’s allegedly inadequate regulatory status.
The Hong Kong Securities and Futures Commission (SFC) on September 13 complained about JPEX’s various practices, including its offer of returns on USDT. JPEX acknowledged the complaint on September 14 and responded by adjusting the withdrawal fees for the USDT stablecoin. Specifically, the exchange significantly increased the USDT withdrawal fee, seemingly allowing the company to keep the majority of each withdrawal request.
JPEX also temporarily shut down another service, the Gaming Lobby, on September 15. The company claims that most of its services will remain operational.
It should be noted that the SFC’s complaints extend well beyond JPEX’s interest-bearing services. The regulator also complains that the exchange has failed to obtain licenses, failed to meet customer withdrawals and falsified partnerships, among other things. Statements from authorities indicate that investigations are ongoing and expanding.
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