September Overview

Your Monthly Brief into the World of Digital Assets

JKL Group
19 min readSep 29, 2023

1. Market update

2. September in a Nutshell

3. Regulators

  • $190 million JPEX scam exposed as Hong Kong regulators take action
  • The unrelentless Elizabeth Warren and her bipartisan bill against digital assets

4. Mining

5. Institutions

6. Crypto Projects

7. October Preview

  • Bitcoin performance calendar
  • Macroeconomic events
  • Crypto events

1. Market update

The bitcoin market remained dull in September with the month’s volatility being confined within a 10% range. On a positive note, prices saw support at the key horizontal level at $25,000, spurred by news that another major asset manager, Franklin Templeton, has applied for a spot Bitcoin ETF to be listed in the U.S. stock exchange.

However, it continues to trade underneath the 200-week moving average currently situated at around $27,867. Traders are eyeing a reclaim of the line in order to project a bullish view of the asset, at least in the short term.

Economic data continue to indicate a robust U.S. economy with no signs of an imminent recession. The U.S. ISM Non-Manufacturing PMI rose unexpectedly to 54.5 in August, reflecting good momentum in the services sector. Data showed increased new orders and higher prices paid for inputs, which are potential signs of still-elevated inflation pressures.

U.S. inflation statistics were reported mostly as expected. The CPI rose 0.6% in August, recording the biggest monthly gain of this year but in line with expectations. Core CPI increased 0.3% MoM and 4.3% YoY against estimates of 0.2% and 4.3% respectively.

In the September meeting, the Fed opted to keep interest rates unchanged at 5.25–5.5% while signaling for another hike this year, and as reflected through the dot plot, is only expecting interest rates to decrease only half a percentage point in 2024, which is lower than market expectations of a full percentage point. As such, restrictive monetary policy in the U.S. over the next six to twelve months will serve as consistent headwind against crypto markets. The 10-year Treasury yield also reached above 4.61%, its highest level in more than 15 years.

Regarding crypto fundamentals, the Ether token has turned inflationary due to a slowdown in network activity, and network revenue fell to the lowest level in nine months. According to a report by JP Morgan, the Ethereum Shanghai upgrade in April has been ‘disappointing’ and does not seem to have boosted activity on the blockchain. This view is nevertheless disputed by on-chain analyst Thor Hartvigsen, who noted that users in the Ethereum ecosystem across mainnet and Layer 2 networks have constantly increased throughout the year, despite the bear market.[1]

At the same time, the Bitcoin network is bustling and is currently going through another bout of congestion, with the mempool at the highest point in history. The explosion in blockspace demand can be attributed to inscriptions, which allow users to “inscribe” things like images, text, and audio onto the Bitcoin blockchain.

2. September in a Nutshell

3. Regulators

$190 million JPEX scam exposed as Hong Kong regulators take action

On 13 September, the Hong Kong Securities and Futures Commission (SFC) issued a warning statement against JPEX, a local crypto exchange. The statement said that the platform has been operating without the required virtual asset trading platform (VATP) license and elaborated on six suspicious points about the exchange. These included JPEX offering very high returns for some of its products, false claims about applying for a VATP license, as well as complaints from retail investors who were unable to withdraw funds from the platform, or had found their account balances being reduced and altered.

The action was unprecedented as this was the first time that the SFC specifically named a crypto exchange for potential malpractices. Shortly after the published statement, JPEX users reported that the platform has modified withdrawal fees to as high as 99.9% of the intended withdrawal amount, effectively freezing outflows. The Earn Trading function, which is one of the platform’s key features, was also suspended several days after the official warning.

Source: Blocktempo / X

Prior to the incident, JPEX was almost unheard-of outside Chinese-speaking regions. In mid-September, however, the exchange captured attention from overseas crypto media and communities, especially since JPEX was one of the platinum sponsors at the TOKEN2049 crypto event held in Singapore. According to Blockhead, JPEX was “shilling their products” at its booth on Day 1 of the conference, i.e., 13 September, before the announcement from the Hong Kong regulators that evening. Reacting to the news, the crypto media outlet visited the booth again the next day but discovered that the booth had already been vacated, leaving behind a few t-shirts, a deserted gachapon machine, and several business cards.

Despite its obscurity overseas, the so-called crypto platform has been active for some time. It targeted Chinese language users, mainly those in Hong Kong, but has also been expanding to Taiwan and Mainland China shortly before its collapse.

According to information still available online, JPEX began its operations in around 2019. Since its early days, its prime product was Earn Trading, also known as the IAIA arbitrage trading system, which promised high double-digit returns on major cryptocurrencies like Bitcoin, Ethereum and Tether (USDT). From its now deleted blog, JPEX claimed that the product is “an automatic circular arbitrage system based on artificial intelligence, which was developed by the team of Dr. Ito from the University of Tokyo, Japan.” Of course, there is no evidence that Dr. Ito exists in real life.

Source: Getty Images / JPEX

JPEX claimed to have obtained various licenses from the U.S., Canada, Australia and Lithuania, and began to market aggressively to the public of Hong Kong in 2021. Campaigns included large-sized advertisements in prime locations of the city including buildings and metro stations. Initially, the exchange branded itself as the JPEX “Japan Exchange”, alluding itself to JPX, the Japanese stock exchange. It is until JPX took notice of the issue and clarified in March 2022 that it has no affiliation with the crypto exchange, when JPEX rebranded afterwards as the JPEX “Crypto Platform”.

In addition, JPEX partnered with celebrities, key opinion leaders (KOLs) and Instagram models to promote the exchange. In mid-2022, it hired Julian Cheung, well-known actor and singer, to be its spokesperson. Apart from celebrities and KOLs, it was very likely that JPEX had an “internet army” that help to spread positive news and ratings online, while monitoring any questions and skeptics to refute or obfuscate them quickly. These are all part of JPEX’s approach to establish a sense of legitimacy for the exchange. Indeed, as a key element for any successful scam, this false portrayal of legitimacy and reliability played a pivotal role for JPEX to attract large sums of inflow.

Source: Yahoo HK / HK01

Yet, the most powerful element of the JPEX scheme was its sizeable network of over-the-counter (OTC) crypto outlets, which it leveraged ingeniously to target the city’s unique crypto ecosystem. Due to the lack of safe and reliable on-and-off-ramp infrastructure, local crypto investors have been relying on OTC shops to convert their fiat currency into stablecoins like USDT before they could buy into other cryptocurrencies.

Seeing the opportunity, JPEX partnered with several existing and new OTC crypto outlets to promote the exchange and its investment products. These outlets were diversified in terms of branding and targeted customers, from pro-government to anti-establishment, from young men to independent women, and from food to animal lovers. The common element, and for obvious reasons, was that they all targeted newbies who had little or no experience in crypto. The affiliated shop-owners and KOLs were portrayed as successful individuals who achieved financial independence through crypto investments. They produced videos on Instagram and YouTube to educate viewers about crypto, analyze price trends, and promote JPEX. Later, these shops began to offer crypto seminars and classes for beginners, providing a convenient venue for promotional activities. They also offered regular discounts for USDT, though with a hidden condition: the purchased stablecoins must be deposited into JPEX only.

Source: Instagram / HK01

In August 2022, JPEX launched its native platform token JPEX Token (JPC) and began to market it heavily. It was described as the next big thing in crypto that promises tremendous potential given the rapid expansion of the JPEX brand and user base. The Token was often compared with Binance Coin (BNB) that had seen astronomical gains since its launch. Indeed, the performance of the JPC was stellar to say the least. The token price was initially set at $0.0001 and took no time to rise above $0.01, making it a 100x coin and a powerful narrative to attract buyers and speculators. In the meantime, the token was only tradeable on the JPEX platform, meaning that the token price was easily manipulated.

Portraying a high profile and promising attractive returns, many people were persuaded successfully by JPEX and deposited significant amounts of money into the centralized platform. However, some crypto natives in Hong Kong were alarmed and convinced that it was intended to be a scam all along.

Thanks to the open and transparent nature of the public blockchain, this conjecture was quickly substantiated. On-chain investigators were able to identify the main wallets of JPEX and found that user’s deposits were commingled within their system. While the amount of money in JPEX wallets grew steadily through 2022 and accelerated following the launch of JPC, some of these funds were transferred away into external wallets, leaving a hole in the platform’s assets and practically constituting theft. The remainder of the money were either locked within JPEX or were recycled back to its OTC network to facilitate more deposits. These are illustrated by the schematic below on the right.

Source: Arkham Intelligence

In a sense, JPEX can be classified as the insolvent crypto exchange that would collapse if users began to withdraw en masse. At the same time, the masterminds had their methods to stem outflows. For example, the JPC staking program lured token holders to lock their funds for specified periods, from three months to one year, in exchange for high staking rewards. As the staking period ended, some users reported that instead of being allowed to withdraw their tokens, they were prompted to re-stake the entire amount. In mid-August, local television reported a suspected case of assault in the rural areas of Hong Kong. A mainland Chinese user of JPEX claimed to have been physically attacked after being contacted to travel to the city to process his withdrawal request.[2] Today, we also know that the SFC had received reports from users who alleged that their balances were altered or reduced.

Apparently, the ambitions of JPEX were not limited to Hong Kong as it began to expand overseas. In late 2022, the JPEX Metaverse Lab was unveiled in Australia. The main arena, however, was in Taiwan. In June 2023, JPEX established its twelve-story Taiwan headquarters, named Blockchain Center of Asia. It also announced The Cage 2023, which is a series of boxing matches at the Taipei Dome between celebrities like Toyz, Derek Chung, and YouTuber “Xiaogege” Avis.

Source: JPEX / Blocktempo

But it is also around here that the entire scheme begins to fail, leading to its inevitable disintegration. After the boxing match, it was discovered that the prize money sponsored by JPEX was transferred directly from the exchange’s wallets that contained user deposits.[3] This was reported in major Chinese crypto news outlets and led to renewed suspicion from existing users of JPEX in Hong Kong, as well as those in Taiwan who were new to this brand. By mid-July, an Instagram page was created in attempt to warn unsuspecting users to stay away or withdraw from JPEX. At this point, we can see from on-chain data that inflows began to stall, and outflows accelerated from JPEX wallets.

Back to Hong Kong, the rapid growth of JPEX triggered the alarm of local regulators. JPEX had been under the radar since July 2022, when it was placed under the SFC alert list.[4] However, the alert initially contained only the JPEX website URL and a warning against trading with unregulated platforms. Since most crypto exchanges in Hong Kong were unlicensed, JPEX was able to deflect the questions that came along with it. In August this year, the SFC finally took a step further and warned against “improper practices” by certain crypto trading platforms, but without giving specific names.[5] It reminded that unlicensed VATPs should proceed to wind down operations in Hong Kong. Seeing no action being taken by JPEX, the final crackdown ensued in mid-September.

In the aftermath, the sheer magnitude of the JPEX scam began to reveal. As of 27 September, 2,407 individuals have filed a report with the Hong Kong Police, and reported losses aggregate to approximately 1.49 billion HKD ($190 million). The police have since detained 15 individuals, whom are mostly the personnel-in-charge and employees of JPEX-affiliated OTC shops, on suspicion of conspiracy to defraud.

Due to the size of monetary losses, the JPEX case attracted significant attention and concern in Hong Kong. The leading local media South China Morning Post described the case as “one of Hong Kong’s biggest ever financial frauds”. It is also unlikely that the reported figure represents the full scale of the scheme. From mid-September onwards, around $213 million of BTC, ETH and USDT outflows have been observed from JPEX wallets, and that number is still increasing.[6]

Some have criticized the SFC of the role it played in the JPEX scandal. It had placed JPEX on the alert list since more than twelve months, but failed to properly warn the public of the risks involved with the platform. Some also highlighted the timing of the SFC’s final warning, describing it as “detonating the bomb” during TOKEN2049 in Singapore and well before the Hong Kong FinTech Week to be held in November. In response, the SFC explained that it had “no power at all to regulate JPEX” before the new VATP statutory framework came into effect in June this year, and could not take action before more concrete evidence emerged that suggest it was a fraud.

In retrospect, it is no doubt about the fact that JPEX was an elaborate scam, an act of organized crime. It took advantage of crypto as an emerging asset class, along with the grey areas that existed without a mature regulatory framework around crypto firms and assets. It effectively leveraged different facets of human psychology, such as greed, celebrity endorsements and peer pressure to facilitate the fraudulent scheme. After the SFC warning in mid-September, the global offices and affiliated shops of JPEX were quickly vacated, with some suspects believed to have absconded from Hong Kong. This suggests that the organization had an exit plan and executed it swiftly. Even though a dozen of people has been arrested by the police, they are unlikely to represent the true beneficial owners of the exchange. The identity and whereabouts of the masterminds behind JPEX remain a mystery.

The relentless Elizabeth Warren and her bipartisan bill against digital assets

In contrast to stagnating crypto markets, regulatory oversight is busy as ever. In a recent development, U.S. Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act has garnered the support of nine additional U.S. senators, amplifying her campaign against the perceived threats of cryptocurrencies. This news comes directly from a press release on Senator Warren’s official website.[7]

Initially introduced in December 2022 and re-submitted in August[8] this year with Senators Joe Manchin (D), Roger Marshall (R), and Lindsey Graham (R), the Act’s primary objective is to seal regulatory gaps and usher the digital asset ecosystem towards enhanced compliance.

Eight Democratic senators, along with independent Senator Angus King, have joined in support of the Bipartisan bill. This underscores the growing concern in Congress with regards to digital assets.

The bill aims to extend the regulatory framework currently applied to traditional financial institutions to cover cryptocurrency firms. This means entities within the crypto space, including digital asset wallet providers, miners, and validators, would be subjected to Know Your Customer (KYC) and Anti-Money Laundering (AML) stipulations as set out in the Bank Secrecy Act (BSA).

Like always, Senator Warren gave an aggressive statement: “Crypto is enabling rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions in stolen funds, evade sanctions, fund illegal weapons programs, and profit from devastating cyberattacks.” She displays her determination by describing the Digital Asset Anti-Money Laundering Act as the “toughest proposal on the table cracking down on crypto’s illicit use”. She highlights the expanded coalition as an indication of the Congress’ readiness to act upon the issue.

A significant aspect of the document is its stance on non-custodial, or “unhosted” crypto wallets. These are defined as “software or hardware that facilitates the storage of public and private keys used to digitally sign and securely transact digital assets, such that the stored value is the property of the wallet owner and the wallet owner has total independent control over the value.” The legislative proposal mandates banks and money service businesses to authenticate customer and counterparty identities, maintain records, and submit reports concerning specific digital asset transactions involving unhosted wallets or those hosted in non-BSA compliant jurisdictions. Furthermore, the bill specifies that U.S. residents holding over $10,000 in crypto, across one or multiple accounts outside the U.S., would be obligated to file reports to the government.

Supporting the Act, Senator Graham reiterated the concerns that anti-crypto groups have been voicing out for the past ten years: “All too often crypto is used to move illicit funds for drug cartels, criminal gangs, terrorist groups, and kidnappers.” He emphasized the need for transparency and oversight in an industry that often aids criminal endeavors, drawing parallels between the regulations for fiat dollars and those currently proposed for crypto.

This echoes comments earlier this year by Senator Warren, who has been a consistent critic of cryptocurrencies. Following research[9] published in May this year by blockchain analytic firm Chainalysis, Warren again expressed her concerns about the role of crypto in criminal activities, positing that “crypto has become the illicit finance tool of choice for ransomware gangs, fentanyl traffickers, and rogue nations like North Korea.”

However, it is essential to understand that while cryptocurrencies may be involved in some illicit activities, it does not make them the primary driver of the modern drug trade or other online crimes. Singling out crypto to blame, as Senator Warren does, is simply overlooking the bigger picture. If not cryptocurrencies, other emerging technologies could easily fill the void. Just as it is a misconception to say that crypto is solely responsible for the surge in ransomware attacks, attributing the rise of online drug markets solely to crypto is a narrow viewpoint. These are rather the broader side effects of the increased integration of the internet into various facets of people’s lives.

Regulators: Read More


- SEC Defers Decisions on Fidelity, BlackRock Bitcoin ETFs (Read More)

- FASB Says Crypto Assets Should Be Marked at Current Values (Read More)

- IMF, FSB Lay Out Roadmap To ‘Address Risks’ Posed by Crypto to Financial Stability (Read More)

- CFTC Goes After Opyn, Other DeFi Operations in Enforcement Sweep (Read More)

- SEC Counters Ripple in Effort to Appeal Groundbreaking XRP Ruling (Read More)

- Bitfinex and Tether CTO Paolo Ardoino to Testify in Market Manipulation Lawsuit (Read More)

- Hong Kong-Israel CBDC Project Examines Security, Privacy, Accessibility (Read More)

- Singapore Turned Conservative on Crypto After FTX, Zhao Says (Read More)


- Crypto Platform JPEX Shuts Down Trading Amid Hong Kong Probe (Read More)

- Senator Warren’s Crypto Money Laundering Bill Builds Momentum as More Sign On (Read More)

- SEC Rips Into Binance.US Over ‘Shaky’ Asset Custody, Asks Court to Order Inspection (Read More)

- India May Keep Door Shut on Crypto for Two Years, Key Local Exchange Says (Read More)

- Hong Kong to disclose crypto license applicants in wake of JPEX probes (Read More)

- CFTC Denies Kalshi’s Plan to Let Users Bet on Control of U.S. Congress (Read More)

- SEC Extends Ark, Global X ETF Deadlines as Government Shutdown Looms (Read More)

- Ethereum Futures ETF to Begin Trading as Rumors Swirl of Accelerated SEC Approvals (Read More)

4. Mining


- Bitcoin Miners Draw From Iceland’s Surplus of Renewable Energy (Read More)

- Cambridge Updates Bitcoin Mining Index to Reveal True Power Consumption (Read More)

- Bitcoin Miner Riot Platform Made a Record $31 Million From Power Credits in August (Read More)

- Senator Ted Cruz: Bitcoin Mining Is Benefitting The Grid And The U.S. Economy (Read More)

- Crypto companies form Texas blockchain group to advocate for clear regulations (Read More)

- Bitcoin Miners Lead In Clean Energy Adoption, Surpassing 50% (Read More)

- Celsius, Core Scientific Resolve Acrimonious Mining Dispute With $45M Deal (Read More)

- Bitcoin Miner F2Pool Returns 19.8 BTC to Paxos After Overpaid Fee (Read More)


- Bitcoin miners seek alternative energy sources to cut costs (Read More)

- Bitcoin Miner Hut 8 Inches Toward Merger With USBTC as Court Approves Deal (Read More)

- Coinbase takes precautions as mining pool captures half of Zcash hash rate (Read More)

- Chilean Drug Trafficking Ring Was Also Mining Bitcoin: Report (Read More)

- Bitcoin mining rig maker Bitmain plans to invest $54 million in bankrupt Core Scientific (Read More)

- Police Seize Bitcoin Mining Machines in Venezuelan Prison Bust (Read More)

- Arbitrum Users Can Now Trade Bitcoin Mining Power With Each Other (Read More)

- Texas Is Now the Top US Bitcoin Mining Spot: Foundry (Read More)

5. Institutions


- Jump’s Crypto Specialists Depart for Blockchain-Focused Startup (Read More)

- Robinhood to Buy Back Sam Bankman-Fried’s Stake for $605.7M (Read More)

- Visa Taps Solana and USDC Stablecoin to Boost Cross-Border Payments (Read More)

- Cathie Wood’s ARK Invest Files for First Spot Ether ETF (Read More)

- Franklin Templeton Joins Race to Offer US Spot Bitcoin ETF (Read More)

- Pantera Eyes Mid-Stage Crypto Firms After Valuations Sink (Read More)

- Court approves sale of FTX digital assets, up to $3.4B worth to be unleashed (Read More)

- Deutsche Bank to Delve Into Crypto Custody, Tokenization With Taurus (Read More)


- Citi expands digital asset services with bond custody, tokenized deposits (Read More)

- VC Firm Blockchain Capital Raises $580 Million for Crypto Gaming, DeFi Bets (Read More)

- Mt. Gox Trustee Extends Deadline for Creditor Repayments By a Year (Read More)

- Stablecoin Issuer Tether Ventures Into AI With Northern Data in $427M Nvidia Chip Splurge (Read More)

- European Crypto Asset Manager CoinShares Starts US Hedge Fund Division (Read More)

- Google Cloud Pushes Deeper Into Blockchain Data, Adding 11 Networks Including Polygon (Read More)

- Crypto Exchange Kraken Plans to Offer Trading in US-Listed Stocks (Read More)

- Coinbase to Offer Perpetual Futures to Retail Customers Outside U.S. (Read More)

6. Crypto Projects


- MakerDAO Should Use Solana’s Code to Build Its New Blockchain, Co-Founder Says (Read More)

- Crypto Casino Stake Targeted in Reported $40M Exploit (Read More)

- Story Protocol launches with $54 million round led by a16z to tap IP ownership (Read More)

- FTX estate sues LayerZero Labs to recover $86M transferred on eve of bankruptcy (Read More)

- Animoca Brands Raises $20M to Pursue ‘Single Native Web3 Project’ Mocaverse (Read More)

- SSV Network launches decentralized staking mainnet with partner apps (Read More)

- Messaging App Telegram Gives Endorsement to TON Project; Token Surges (Read More)

- Superapp Grab, Stablecoin Issuer Circle to Start Web3 Wallets Trial in Singapore (Read More)


- Ethereum’s Holesky Testnet Fails to Launch, in Rare Tech Misstep for the Blockchain (Read More)

- Crypto Startup Led by Former Andreessen Executives Raises Cash (Read More)

- Balancer Frontend Hit By DNS Attack, Over $250K Stolen (Read More)

- JPMorgan says Ethereum’s activity post-Shanghai upgrade has been ‘disappointing’ (Read More)

- Inscription Craze Leaves Thousands of Bitcoin Transactions Unconfirmed (Read More)

- Defi Project Mixin Network Suspends Services After $200 Million Crypto Hack (Read More)

- Celestia opens airdrop for planned modular data availability network (Read More)

- Curve Founder Michael Egorov Deposits $35M CRV to Settle Debt on Aave (Read More)

7. October Preview

Approaching October, traders will keep an eye on the possible shutdown of the U.S. government. As congressional lawmakers debate over a budget resolution to keep the government funded for the rest of the fiscal year, the shutdown would happen if they do not reach an agreement in time. The overall effect on crypto markets is ambiguous, but one sure impact is the delays of the approval process for spot bitcoin ETFs, which has been announced by the SEC well before their interim deadlines.

Regarding interest rates, traders are still placing bets on the Fed to keep rates unchanged in the remaining two meetings of this year. But if economic fundamentals and inflation statistics come in higher than expected, they may have to reprice this probability.

Bitcoin performance calendar

With median return of 21.1%, October is statistically the best performing month for bitcoin.

Source: Glassnode, JKL Group. Data as of 28 September 2023.

Macroeconomic events

Crypto events


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The contents of this material have not been reviewed by any regulatory authorities. You are advised to exercise caution in relation to the contents of this material. If you have any doubt about any of the contents of this material, you should obtain independent professional advice. Neither JKL nor any of its affiliates, nor any of its or their respective directors, officers, employees, and representatives will accept any responsibility or liability whatsoever for any direct, indirect, or consequential loss arising from the use of or the reliance upon any information contained in this material. This material does not constitute an offer or an invitation to subscribe for or purchase any financial product. It is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation to purchase any financial product.

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