Cryptocurrency Exchange JPEX Faces Arrests and Repayment Delays: Weekly Roundup

Read the latest news about cryptocurrency exchange JPEX and the delay in repayment for Mt. Gox users. Stay informed on the latest developments in the crypto industry.

Posted 10 months ago in Blockchain

An image of a conference booth being abandoned in a hurry due to law enforcement pursuit.

Our weekly roundup of news from East Asia curates the industry’s most important developments. Last week’s Token2049 conference in Singapore was a life-changing experience for some; for others, the event did not meet expectations — but for a select group of individuals, the imminent prospect of being pursued by law enforcement meant they had to abandon their booths and flee the event.

On Sept. 21, local news outlets reported that Hong Kong police had arrested 11 individuals linked to troubled cryptocurrency exchange JPEX on charges of fraud and operating an unlicensed virtual assets exchange. More than 2,000 users are estimated to have been affected, with $1.3 billion Hong Kong dollars ($166 million) involved. Police allege users’ assets have been embezzled by JPEX staff. In a dramatic raid on Sept. 13 — day one of the conference — Hong Kong police arrested key JPEX executives, leading staff to abandon its corporate booth.

The exchange subsequently applied for voluntary deregistration with the Australia Securities & Investment Commission, disclosing that its Australian entity had little assets left. After the news broke, JPEX reportedly raised its withdrawal fees to 999 USDT per transaction to prevent capital flight. In an announcement on Sept. 20, JPEX said that 400 million Tether (USDT) worth of users’ deposits would be eligible for redemption. However, the catch is that the funds can only be redeemed starting in late 2025. The firm stated that due to the ongoing law enforcement investigation, its telecom service providers and asset custodians have frozen applicable services.

In a press conference, John Lee, the chief executive of Hong Kong, said, “This incident highlights the importance that when investors want to invest in virtual assets, then they must invest on platforms that are licensed.” Founded in 2019, JPEX heavily promoted its presence in Hong Kong with brand banners on local metro stations and taxis, as well as soliciting the help of celebrities such as singer Julian Cheung. Before its collapse, JPEX’s marketing included free vouchers to any users who signed up, offers of up to 300X trading leverage, and stablecoin staking yields exceeding 30% per annum. The firm has since suspended all of its services despite previous assurances that “it will not collapse.”

Users of defunct Japanese crypto exchange Mt. Gox were dealt another setback on Sept. 21, when it was announced that bankruptcy trustees would delay payment deadlines by another year. If executed, this means that the bankruptcy process would have stretched out for 10 years (if not more) since a devastating hack obliterated the exchange in 2014.

In April, Mt. Gox set a final deadline for creditors to register a claim against the defunct crypto exchange. A target date of October 2023 was then set for the repayment of users’ assets. The registration process has been extended periodically for several years. Despite previous reassurances, Mt. Gox trustees wrote.

Mt. Gox was the biggest Bitcoin exchange in the world when it filed for bankruptcy in 2014 after discovering that 850,000 of its customers’ Bitcoin (BTC) had been stolen after years of subtle siphoning. The exchange has since recovered around 200,000 BTC. The funds have been held in trust for the creditors, with 162,106 BTC ($4.38 billion) sitting in wallet addresses tracked by Token Unlock.

At the time of the hack, the price of Bitcoin was around $580 apiece, meaning that many creditors would have realized gains on investment despite over half of their BTC being stolen. In its communication to creditors, the trustee stated that payments could come as soon as the end of this year for registered creditors. However, like for the past decade, a caveat clause was included (as always):

Singaporean firm DCS Fintech Holdings has received a $10 million investment from Foresight Ventures for creating crypto-fiat on-ramping solutions. According to the Sept. 21 announcement, DCS, which originally stood for “Diners Club Singapore,” the first credit card issuer in the city-state nation, will use the capital to develop “new payment solutions that provide a seamless connection between Web2 and Web3.” Its subsidiary, DCS Card Center, is regulated by the Monetary Authority of Singapore for issuing credit cards.

CEO Karen Low commented: As part of DCS’s initial foray into Web3, it has developed a Singaporean-dollar-backed payment token, which is also dubbed “DCS,” for the financial service sector. Also based in Singapore, Foresight Ventures is a $400 million fund investing in Web3, AI and blockchain-related entities. In May, the firm pledged an additional $10 million for its Web3 accelerator, bringing the total to $20 million. The firm also backs the $120 million Sei Ecosystem Fund.

Last updated 9/21/2023, 6:59:47 PM


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