Despite recent controversy, the crypto exchange JPEX has announced a plan to convert user assets to dividend shares and transition to a decentralized autonomous organization (DAO). To encourage users to participate, the plan includes a two-year lock-up period with incentives for participants. This move has sparked questions and concerns from industry experts and users who claim their assets are being converted without their knowledge.
The platform in an Oct. 4 announcement claimed that after thorough data verification, 68% of users voted in favor of the scheme, as voting for its DAO shareholder dividend program was completed on Sept. 28. JPEX also plans to provide shareholders and users with an enhanced trading experience with its new program.
Users can essentially convert their frozen assets for a stake in the DAO, and after a year they can sell that stake back to JPEX at a 30% discount, or after two years they can sell it back for the original conversion price.
In an earlier announcement, JPEX stated that a reward would be given to users who agreed to the scheme. The platform said users would receive dividends from JPEX through a new token listing, trading fees, and a distribution of the exchange’s native token JPEX Coin (JPC) in proportion to shareholder dividends.
The scheme left users with no option butbut to keep their funds locked on the exchange, which is experiencing liquidity issues.
However, on Oct. 4, one anonymous JPEX user told the South China Morning Post (SCMP) in a report that the platform had converted her assets without her consent to JPC, a low liquidity token with few use cases. She claims that after JPEX’s announcement to proceed with the plan, she and other users discovered they could no longer withdraw their assets.
“All of my [Tether] USDT and other cryptocurrencies are gone,” the user said.
“Some other users holding the tokens and other assets have also found them transferred,” the person said, adding, “Given the unknown price and the impossibility of withdrawal, our assets have now become just waste paper.”
It’s unknown if the people quoted in the report voted in favor of the plan, but some users have reported that they were not given a choice to reject the plan and that they’d been forced to accept it.
JPEX did not immediately respond to any request for comment.
JPEX’s dividend plan comes amid allegations that the exchange has been operating without proper authorization, leading to arrests and an ongoing investigation.
Reports from Hong Kong police stated that the Dubai-based exchange scammed at least 2,300 people for 1.4 billion Hong Kong dollars ($178 million). Which in turn led to the region’s police and securities regulator creating a crypto-focused task force to fight illicit activities by crypto exchanges.