JPEX Exchange's Conversion Plan Sparks Controversy Amidst Fraud Accusations
Summary:
The troubled cryptocurrency exchange JPEX is moving forward with a plan to transform into a decentralized autonomous organization (DAO), converting user assets into shares that offer dividends to encourage users to lock them up for two years. The plan claims to have received 68% support from its users. However, a user has reported that the assets were converted without her consent and they are now impossible to withdraw. Amidst these issues, the Hong Kong police and Securities and Futures Commission have formed a joint task force to address illegal activities by crypto exchanges. The plan and resulting controversy arrive amid accusations that JPEX, a Dubai-based platform, has defrauded its users, leading to a loss of $178 million (1.4 billion Hong Kong dollars).
The troubled crypto marketplace, JPEX, is proceeding with a strategy that will allegedly evolve the platform into a decentralized autonomous organization (DAO). The strategy also includes converting users' assets into shares that offer dividends with a motivation to retain them for two years. JPEX announced this approach, titled “DAO Shareholder Dividend Scheme”, on October 4 and reported that the voting, which ended on September 28, had received support from 68% of its user base.
The strategy entails a transformation of users' currently halted assets into DAO Stakeholder dividends, maintaining a 1:1 ratio. JPEX has committed to an option of repurchasing at 30% of the conversion cost post one year, and full repurchase after two years. The offer also includes receiving dividends from JPEX in the form of new token listing and trade costs, and distribution of JPEX Coin (JPC) relative to shareholder dividends.
This scheme seemingly aims to encourage users to maintain their funds on the beleaguered platform, which recently has been under liquidity pressure. A user of JPEX, whose identity is kept private, told South China Morning Post on October 4, that her assets were converted without her consent or prior notification. Post JPEX's announcement of the strategy, she and other users discovered that they could no longer withdraw their assets.
A joint task force has been established by Hong Kong police and the city’s Securities and Futures Commission to restrict illegal activities of crypto exchanges. Amidst this, the issues with JPEX persist. An unnamed person stated to the press, “All of my [Tether] USDT and other cryptocurrencies are gone,” Claming, that these assets were converted to JPC, a token with low liquidity and limited applicability. The value of the assets has diminished as they cannot be withdrawn and the price is uncertain.
Many users of JPEX previously mentioned to SCMP that the plan was imposed on them as there was no alternative to vote against the strategy on the platform’s app. Their reactions to the plan are still undisclosed. JPEX has not issued any response to a comment request from Cointelegraph.
While all these events are unfolding, Hong Kong police have arrested several people associated with JPEX as the exchange is accused of not being an authorized crypto platform by the local security regulator. The Dubai-based exchange is said to have deceived at least 2,300 people, leading to a loss of $178 million (1.4 billion Hong Kong dollars).
Earlier on October 4, a task force focused on crypto was initiated by the region's police and security regulator to control illegal activities by crypto exchanges.
Published At
10/5/2023 5:51:45 AM
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