Korean Financial Watchdog Warns Investors Against Crypto Scams

Hong Kong Authorities Block Access to JPEX Amid Ongoing InvestigationDubai-headquartered crypto exchange JPEX has been under intense scrutiny in Hong Kong over the course of the past week due to issues experienced by Hong Kong users in withdrawing funds from the platform. In the most recent twist to the saga, authorities in the Chinese autonomous territory have now blocked access to the JPEX website and mobile application.Photo by Tao Yuan on UnsplashCutting off service accessThe firm published a statement on Wednesday, outlining this latest sanction, while protesting that the move had been unreasonable. It appears that the authorities requested local telecommunications providers to block access to the company’s online platform.The measure follows ongoing enforcement actions initiated by local law enforcement agencies, which have led to the detention of at least 11 individuals and the seizure of assets related to the case. The scandal has also had implications for the crypto sector as a whole, as local regulators are now looking once more at regulation and determining if there’s a need to tighten regulatory measures as a consequence of JPEX’s failings in Hong Kong.VPN recommendationIn its statement, JPEX stated:“Since September 13, 2023, the SFC [Securities and Futures Commission] has suddenly made a series of accusations against our platform’s operating model and promotional methods, which we vehemently resent as they were made without investigation or review.”In response to the blocking of their platform, JPEX has encouraged users to utilize virtual private network (VPN) services to access their services. The exchange sought to reassure its user base, stating: “Here, we strongly reiterate that, even in the face of such oppression and unfair treatment, our platform will continue to operate as usual. Users can log into our mobile application or operate on our web version using VPN applications like Surfshark.”The investigation into JPEX was initiated following warnings from the SFC regarding false or misleading statements made on social media by crypto influencers and the trading platform relative to a trading license application.On Sunday, JPEX announced that it had suspended certain operations and increased withdrawal fees due to an ongoing liquidity crisis, triggering an influx of complaints from users. As of Monday night, the police had received a total of 1,641 complaints, with claims amounting to approximately HK$1.19 billion ($152 million) in assets involved, as revealed during a police briefing on Tuesday.DAO Stakeholders Dividend PlanIn response to these developments, JPEX unveiled plans for a “DAO Stakeholders Dividend Plan.” Under this initiative, JPEX users will have the opportunity to convert their assets on the platform into DAO stakeholder dividends at a 1:1 ratio.The exchange intends to distribute 49% of the DAO Stakeholder dividends, with an estimated total value of approximately 400,000,000 USDT available for subscription and conversion. Additionally, JPEX plans to offer repurchase options one year and two years after the program’s launch.New users who subscribe to the DAO stakeholder dividends will enjoy double payouts, and they will not be required to bear all the operational responsibilities of the platform. This move is seen as an attempt by JPEX to address the concerns of its user base and navigate the challenges it currently faces.The situation surrounding JPEX remains fluid, with ongoing investigations and regulatory actions continuing to unfold.

Leading crypto exchange platform OKX has disclosed plans to discontinue its mining pool services, marking a strategic shift for the platform.Photo by engin akyurt on UnsplashService shutdown within one monthThe move, outlined by the firm in a notification to platform users on Friday, involves ceasing new user registrations effective immediately. Existing users will be granted access to the mining pool until Feb. 25. All mining pool-related services on OKX will be completely halted by Feb. 26. Mining Pools data reveals that OKX holds the 36th position among the top 70 bitcoin-focused mining pools, boasting a total hash rate slightly exceeding 496 TH/s. The decision to phase out mining pool services was attributed to "business adjustments," as communicated by OKX, though further details were not provided regarding the specific nature of these adjustments. Previously, OKX's mining pool supported various proof-of-work cryptocurrencies and offered staking services. However, over recent years, many supported assets had been terminated. Presently, the website only displays bitcoin, litecoin and ethereum classic pool services. Once accounted for 5% of all BTC blocks minedOKX's bitcoin mining pool had once accounted for around 5% of the blocks mined on the network. However, a setback occurred on October 16, 2020, when the crypto exchange temporarily suspended withdrawals due to one of its private key holders “cooperating with a public security bureau in investigations.” This led to a significant drop in hashpower connected to the pool, from 9,000 PH/s to 20 PH/s. The pool's current 528 TH/s now represents less than 0.0001% of bitcoin’s total hash rate. Industry trend formingThis strategic move by OKX reflects the evolving landscape of the crypto industry and the challenges faced by mining pools, particularly in the context of regulatory and operational adjustments within the market. The decision may even amount to a formative trend, given that global crypto exchange platform rival KuCoin made a similar move back in August. At the time, KuCoin outlined its plans to temporarily suspend its bitcoin and litecoin mining pools. Although it suggested a temporary halt to such services, there was no indication of when such mining-related services would resume. A company spokesperson stated:“We will see if it is needed to restart based on the market and users’ demand in the future.” Bitcoin halving pressuresOKX’s decision to discontinue mining pool services comes ahead of bitcoin's anticipated fourth halving in April, which is expected to reduce miner rewards from 6.25 to 3.125 BTC. The halving is casting a shadow over the mining sector. Miners' business cost per bitcoin mined is going to increase significantly. Some industry commentators speculate that the break-even point for miners will reach an unsustainable level. NASDAQ-listed Riot Blockchain, in particular, is being singled out as potentially being susceptible due to its cost structure. Miners have had a difficult couple of years, working their way through the bear market component of the last market cycle. That period saw leading miner Core Scientific declare bankruptcy. The company has since restructured and has been relisted on the NASDAQ.  

Hong Kong regulator, the Securities and Futures Commission (SFC), which oversees Hong Kong’s securities and futures markets, is understood to be planning to give the go-ahead for crypto derivative products to be offered to professional investors within the Chinese autonomous territory. Chinese English-language newspaper China Daily reported on June 4 that the proposed move forms part of Hong Kong’s efforts to expand its digital assets-related product offering in order to further bolster its position as a leading regional hub for the sector. Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, told the publication that the SFC will open up crypto derivatives trading to professional investors in the city “in an orderly, transparent and secure manner.”Photo by Florian Wehde on UnsplashBoosting liquidity to spot marketsChina Daily claimed that the SFC outlined that the crypto derivatives product will enable efficient risk transfers, while boosting the liquidity of the underlying spot markets. TokenInsight data suggests that the global crypto derivatives market has reached $21 trillion in trading volume over the course of Q1 2025. By comparison, derivatives trading dwarfs spot trading, given that spot trading weighed in at just $4.6 trillion over the same period. Liquidity in the underlying spot markets can be enhanced by a broadening of crypto derivatives product offerings in instances where digital assets are traded for immediate payment and delivery. Their availability will also appeal to professional traders and investors who need access to derivatives as part of their overall strategies in order to hedge positions and add leverage when required. Industry interestReaction to news of the Hong Kong SFC’s plans has largely been positive. Back in February, Jean-David Péquignot, chief commercial officer (CCO) with the world’s largest crypto derivatives exchange Deribit, told the South China Morning Post that opening up availability of crypto derivatives products was the one item missing from Hong Kong’s push towards development as a hub for the digital assets sector. At the time, he stated:“Hong Kong is this central financial hub in the world and a big one in Asia. If regulators can solve the derivatives piece, it is a place where we love to be.” On that basis, Péquignot suggested that Deribit, headquartered in Dubai, would be interested in establishing itself in Hong Kong, suggesting that “Asia is a big market for derivatives.” He added:“We want to be in Asia. We just need to find the right place and time to engage with regulators and get a regulatory framework to work with.” The company’s acquisition by Coinbase was announced last month for $2.9 billion. Regulatory approach questionedWhile many see the move towards the approval of crypto derivatives in Hong Kong as bullish, not everyone perceives the regulator’s approach in this instance to be positive. Pseudonymous crypto trader “Pickle Cat” outlined on X that “opening crypto derivatives only to 'professional investors' isn’t progress.”  The trader points out that good regulation would concentrate on controlling issuance and not circulation. Suggesting that the SFC has missed the point in its approach, the trader claims that the regulator would serve the crypto derivatives market best by verifying what backs such products while not restricting how such tokens move.