Following a recent proposal to transform the platform into a decentralized autonomous organization (DAO), users of the Hong Kong-based cryptocurrency exchange JPEX are furious, alleging that their assets have been changed into JPEX’s JPC token without their consent. The scenario has sparked a firestorm of debate, with some users comparing their assets to “waste paper.”
One disgruntled user, who wished to remain unnamed, expressed frustration with the conversion process’ lack of openness. “Given the unknowable price and the impossibility of withdrawal, our assets have now become nothing more than waste paper,” they claimed.
Users of JPEX are concerned about the future of their holdings because JPEX has not yet provided a public response to these accusations.
Majority of the customers voted for it
Less than 24 hours had passed since a big adjustment in the exchange when the unrest first started. On October 4, 2023, a proposal to convert JPEX into a DAO was approved by a majority of the exchange’s users.
According to this strategy, JPEX users would turn into shareholders with dividend rights under a DAO Shareholder Dividend Scheme. Payouts would be based on commissions on token listings and trade activity.
But it seems that this change has brought about a liquidity problem. DAO dividends can only be claimed by users two years after they are granted, which could be the reason for the challenges with withdrawal. The uncertainty is increased by the conversion of assets to JPC currency and USDT, which can only be distributed when the exchange’s USDT reserves are exhausted.
Arrests made by Hong Kong authorities
There are still issues with the exchange. Authorities in Hong Kong have been looking into JPEX after accusing it of taking part in a $191 million cryptocurrency heist. In response to the alleged scam, at least 12 people have been detained, leading to the formation of a combined task force between the Securities and Futures Commission and the police to fight cryptocurrency-related crimes.
During their inquiry, authorities anticipate thoroughly examining JPEX’s marketing strategies. Like the now-defunct exchange FTX, JPEX used local influencers to market its services with alluring slogans like “high-yield, high-return,” and “low-risk.” Recent legislative adjustments in the US and the UK signify a global initiative to guarantee increased responsibility and openness in crypto marketing.
Users of JPEX and the wider cryptocurrency world are eagerly awaiting new developments as it navigates these rough seas. The conversion of assets and claims of deceptive marketing techniques have raised serious concerns about the exchange’s future and given stakeholders and regulators difficult problems to address.