Crypto Exchange JPEX Faces Backlash as Users Allege Unauthorized Asset Conversions in DAO Shareholder Dividend Program

Crypto Exchange JPEX Faces Backlash as Users Allege Unauthorized Asset Conversions in DAO Shareholder Dividend Program

Crypto News – The embattled cryptocurrency exchange, JPEX, is forging ahead with its ambitious plan to transition the platform into a Decentralized Autonomous Organization (DAO), converting user assets into dividend shares, with a two-year lockup incentive.

On October 4, JPEX made an announcement, revealing that the voting for its DAO shareholder dividend program concluded on September 28, with 68% of users reportedly supporting the scheme.

The program enables users to convert their presently frozen assets to DAO Stakeholder dividends at a 1:1 ratio. JPEX is offering a repurchase option at 30% of the conversion price after one year and a complete 100% repurchase after two years.

In an earlier statement, JPEX mentioned that users who opt for the scheme would receive dividends from JPEX, facilitated through a new token listing, trading fees, and a distribution of JPEX Coin (JPC) — the exchange’s native token — in proportion to shareholder dividends.

This scheme seems designed to incentivize users to maintain their funds within the beleaguered exchange, which is grappling with liquidity issues.

However, a JPEX user, granted anonymity, disclosed to the South China Morning Post (SCMP) in an October 4 report that her assets had been seemingly converted without her consent or prior knowledge.

She alleged that she, along with other users, discovered their inability to withdraw their assets following JPEX’s announcement to proceed with the plan.

“My [Tether] USDT and other cryptocurrencies are all gone,” the individual stated. She claimed that her assets were converted to JPC — a token with low liquidity and minimal use cases.

“Some other users holding the tokens and other assets have also found them transferred,” she added, expressing frustration. “Given the unknown price and the impossibility of withdrawal, our assets have now become worthless.”

It remains unclear whether the individuals quoted in the report voted in favor of the plan. Some JPEX users previously informed SCMP that they felt compelled to accept the plan, as there was no option to vote against it within the app.

JPEX did not respond immediately to Cointelegraph’s request for comment.

JPEX’s dividend plan unfolds amidst Hong Kong police arresting several individuals linked to the exchange, as it faces accusations of operating an unauthorized crypto platform by the region’s securities watchdog.

Hong Kong police assert that the Dubai-based exchange defrauded at least 2,300 people, amounting to 1.4 billion Hong Kong dollars ($178 million).

On October 4, the region’s police and securities regulator established a crypto-focused task force to combat illicit activities perpetrated by crypto exchanges.