Controversy surrounds embattled cryptocurrency exchange JPEX as it proceeds with plans to transform into a decentralized autonomous organization (DAO) while converting user assets into dividend shares with an incentive to lock them up for two years.
In an announcement made on October 4, JPEX revealed that voting for its “DAO Shareholder Dividend Scheme” concluded on September 28, with 68% of users reportedly voting in favor of the initiative. This scheme permits users to convert their currently frozen assets into DAO Stakeholder dividends at a 1:1 ratio.
JPEX further sweetens the deal by offering a repurchase option at 30% of the conversion price after one year and a 100% repurchase option after two years. The key incentive behind this scheme is to encourage users to retain their assets on the exchange, which has been grappling with liquidity issues.
User claims asset conversion without consent
Despite the reported majority approval, an anonymous JPEX user has come forward with claims that her assets were converted without her agreement or prior knowledge. According to the user, she and others discovered they could no longer withdraw their assets following JPEX’s decision to proceed with the plan. The user stated, “All of my [Tether] USDT and other cryptocurrencies are gone,” and alleged that her assets were converted to JPEX Coin (JPC), a token with low liquidity and limited use cases.
The anonymous user expressed concerns, saying,
“Some other users holding the tokens and other assets have also found them transferred. Given the unknown price and the impossibility of withdrawal, our assets have now become just waste paper.”
It remains unclear whether the individuals quoted in the report voted in favor of the plan. Some JPEX users, however, have previously claimed they were compelled to accept the plan, as there was reportedly no option to vote against it on the exchange’s app.
JPEX’s dividend plan amid legal troubles
JPEX’s move to implement the dividend plan comes amidst a backdrop of legal troubles. Hong Kong police have recently arrested multiple individuals in connection with the exchange, which stands accused of operating an unauthorized cryptocurrency platform, according to the region’s securities watchdog. Authorities allege that the Dubai-based exchange defrauded at least 2,300 people of $178 million (1.4 billion Hong Kong dollars).
Coinciding with these developments, Hong Kong’s police and securities regulator unveiled a crypto-focused task force on October 4. The task force aims to combat illicit activities carried out by cryptocurrency exchanges, signaling heightened scrutiny of the crypto industry in the region.
