JPEX crypto exchange faces controversy over asset conversion

JPEX crypto exchange faces controversy over asset conversion

By Charles Thuo - min read
  • JPEX’s attempt to transition into a DAO has sparked controversy and frustration among some users.
  • The users who claim their assets were converted without their consent.
  • The exchange is also facing scrutiny from authorities in Hong Kong.

In a surprising move, the JPEX cryptocurrency exchange has initiated a contentious DAO Shareholder Dividend Scheme, leaving some users in distress as their assets reportedly get converted without their consent.

JPEX recently announced its intention to transform into a decentralized autonomous organization (DAO) and offered users the opportunity to convert their frozen assets into DAO Stakeholder dividends at a 1:1 ratio. Additionally, the exchange introduced a repurchase option, allowing users to recover 30% of the conversion price after one year and 100% after two years.

Disquiet among customers

JPEX’s scheme was seemingly devised to tackle JPEX’s ongoing liquidity challenges, providing an incentive for users to lock up their assets on the platform.

However, the transition has not gone smoothly for all users. Some claim their assets were converted to JPEX Coin (JPC), a low-liquidity token with limited utility, without their consent or prior knowledge.

One user, who spoke to the South China Morning Post, lamented the disappearance of their Tether (USDT) and other cryptocurrencies, which were mysteriously transformed into JPC. This user plus other users now find themselves unable to withdraw or trade their assets, leading to frustration and concerns about their investments turning into “waste paper.”

Remarkably, some users asserted that they were coerced into accepting the scheme, as there was no option to vote against it on JPEX’s mobile application.

Ongoing troubles for JPEX

These developments come amidst a backdrop of ongoing troubles for JPEX. Hong Kong authorities have arrested multiple individuals associated with the exchange, accusing it of operating an unauthorized crypto platform.

The Securities and Futures Commission of Hong Kong also alleges that JPEX defrauded over 2,300 people for $178 million (1.4 billion Hong Kong dollars).

To address illicit activities within the crypto space, Hong Kong authorities have established a crypto-focused task force in collaboration with the police and securities regulator.

As JPEX grapples with these legal challenges and users’ discontent regarding asset conversion, the exchange’s future remains uncertain.