Controversy Surrounds JPEX’s Asset Lock-Up Program Amid DAO Transition
The troubled Hong Kong-based crypto exchange JPEX is embroiled in controversy over its recent asset lock-up plan as it seeks to transition into a decentralized autonomous organization (DAO).
The exchange now plans to convert user assets into dividend shares, encouraging users to lock them up for two years, Cointelegraph reported on Thursday.
Majority in favor of DAO plan
In an announcement from Wednesday, JPEX claimed that 68% of its users had voted in favor of the DAO shareholder dividend program after a referendum was completed on September 28.
Under the proposed scheme, users can convert their currently frozen assets into DAO Stakeholder dividends at a 1:1 ratio.
JPEX also offers a repurchase option at 30% of the conversion price after a year and a 100% repurchase after two years.
Incentive to keep funds on platform
The exchange aims to incentivize users to keep their funds on the platform, which has been experiencing liquidity issues.
Users who agree to the scheme are promised dividends from JPEX, distributed through a new token listing, trading fees, and its native token, JPEX Coin (JPC), in proportion to shareholder dividends.
However, controversy has arisen as some users claim their assets were converted without their agreement or prior knowledge.
Users also reported an inability to withdraw their assets following JPEX’s announcement of the plan.
One user, who requested anonymity, told the South China Morning Post on Wednesday that her assets had been converted to JPC, a token with low liquidity and limited use cases, rendering her assets nearly worthless.
Unclear if users voted in favor
According to Cointelegraph, it remains unclear if the users quoted in the report had voted in favor of the plan.
Some users have alleged they were forced to accept the program, as there was no option to vote against it through the app.
JPEX’s dividend plan comes amidst legal troubles for the exchange, with Hong Kong authorities arresting multiple individuals connected to the platform.
The exchange is accused of operating an unauthorized crypto platform and defrauding thousands of people of millions of Hong Kong dollars.