Kenne Michael 
JPEX, controversial crypto exchange, has moved forward with a plan to allegedly transform the platform into a decentralized autonomous organization (DAO) and convert user assets into dividend shares with an incentive to seal them up for two years.
JPEX announced on October 4 that voting for its “DAO Shareholder Dividend Scheme” concluded on September 28, with 68% of users voting in favor of the scheme.
The scheme allows users to convert their currently locked assets into DAO Stakeholder dividends at a 1:1 ratio. JPEX offers a repurchase option at 30% of the conversion price after one year and 100% after two years.
JPEX stated in a previous announcement that users who consented to the scheme would receive dividends from JPEX through new token listing and trading fees and distribution of JPEX Coin (JPC), the exchange’s native token, proportional to shareholder dividends.
The initiative appears to incentivize users to retain their funds on the troubled exchange, which has experienced liquidity problems.
A JPEX user, who requested anonymity, told the South China Morning Post on October 4 that her assets had been converted without her consent or prior knowledge.
She claims that she and other users were unable to extricate their assets after JPEX’s announcement of the plan’s implementation.
“All of my [Tether] USDT and other cryptocurrencies are gone,” the person said. She claimed her assets were converted to JPC — a low liquidity token with few use cases.
“Some other users holding the tokens and other assets have also found them transferred,” the user said. “Given the unknown price and the impossibility of withdrawal, our assets have now become just waste paper.”
It is unknown whether the individuals cited in the report voted in favor of the plan, but some JPEX users previously told the SCMP they were forced to approve it because there was no option to vote against it on the app.
JPEX’s dividend plan coincides with the detention of multiple individuals in Hong Kong in relation to the exchange, which is accused of operating an unauthorized crypto platform by the region’s securities regulator.
The Dubai-based exchange allegedly defrauded at least 2,300 individuals of $178 million (1.4 billion Hong Kong dollars).
Earlier that day, on October 4, the region’s police and securities regulator established a crypto-focused task force to combat unlawful activities by cryptocurrency exchanges.
