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JPEX Scandal Further Proves that Non-Custodial Staking is the Safest Option to Earn Crypto

JPEX scams investors and further erodes trust in centralized cryptocurrency exchanges

 The cryptocurrency industry is currently in a challenging phase, primarily driven by the prolonged bear market, further exacerbated by controversial news pushing it to a boiling point. The collapse of Terra Luna and the FTX drama have dealt two significant blows to a market already bleeding profusely, with the recent JPEX scandal adding to the pain.

Hong Kong, renowned as one of the world's major financial hubs, became a haven for Asian crypto investors following China's notorious ban in 2021. However, what initially appeared to be a safe harbor turned out to harbor a pirate's cove in the form of the JPEX crypto platform—a source of a scandal that has once again shaken the industry. 

How the scandal unfolded

 Before the scandal erupted, JPEX, which stands for Japanese Exchange, held the position of one of Asia's largest cryptocurrency exchange platforms, though its head office is said to be in Dubai. It touted itself as the sole provider of dividends on crypto investments. However, those with a discerning eye might have observed numerous suspicious elements associated with this entity, including unsubstantiated promises of high returns. These claims were often coupled with exceptionally aggressive marketing campaigns, spearheaded by Chan Yee and Joseph 'Trolling King' Lam, both of whom are widely recognized as leading crypto influencers in Asia. 

The JPEX crypto scandal began to develop in September when JPEX claimed to have a liquidity shortage, followed by users complaining that they couldn't access their accounts, while customer service remained unresponsive. Later, JPEX allowed withdrawals but bumped up the withdrawal fee to $999. Hong Kong authorities were bombarded with complaints from defrauded users who were said to have lost around $178 million. The law enforcement swiftly moved in, apprehending 11 individuals, among them the previously mentioned influencers, all facing serious charges, including fraud, money laundering, and conspiracy to defraud.  

The aftermath: regulatory pressure is set to increase 

The JPEX crypto scandal exposed several critical flaws in Hong Kong's cryptocurrency regulatory framework. JPEX deliberately misled users by falsely claiming local licensing while presumably holding licenses from authorities in Dubai. Furthermore, regulatory oversight faltered as authorities failed to take action when JPEX disregarded their request to confirm its legal operations. It was only when users suffered significant financial losses that the wheels of the law were set in motion. 

As a consequence, the government is gearing up to bolster cryptocurrency regulations over the coming year, temporarily suspending retail stablecoin trading until a comprehensive policy is established. Furthermore, any new cryptocurrencies intended for retail trading must secure approval from the Securities Regulatory Commission. 

Bottom line 

The JPEX scandal underscores the risks associated with centralized exchanges, emphasizing the need for responsible crypto investors to exercise caution when entrusting their capital and earnings to these platforms. Embracing non-custodial staking services like CryptoStake, which do not have access to users' funds, represents a safer and more prudent approach to crypto investing.