JPEX, a cryptocurrency exchange based in Hong Kong, has recently faced criticism due to its decision to restrict user withdrawals. According to a report by The South China Morning Post, JPEX has converted user balances into a non-withdrawable cryptocurrency called JPC. This unexpected conversion has left users unable to access their crypto balances, causing frustration and uncertainty among the affected individuals.
Users of JPEX, including an unidentified individual mentioned in the report, have expressed their dissatisfaction with the conversion of their Tether (USDT) holdings into JPC. The user described the new account balance as “waste paper,” highlighting the drastic reduction in value that JPC possesses. Furthermore, JPC is not traded on any recognized exchanges, making it impossible for users to convert it back into a more widely accepted cryptocurrency.
In addition to the withdrawal restrictions, JPEX has also announced its plans to transform into a decentralized autonomous organization (DAO). The DAO proposal gained majority approval from voters on September 28, paving the way for significant changes within the exchange. One such change includes a shareholder dividend scheme that allows investors to convert funds into DAO stakeholder dividends at a 1:1 ratio. These dividends, which can be claimed after two years, consist of listing fees, trading fees, and JPEX cryptocurrency tokens.
The actions taken by JPEX have caused confusion and frustration among its users. The company has officially confirmed its plans to become a DAO, but it has not publicly addressed or acknowledged the forced conversion of user assets. Earlier customer complaints received by the Hong Kong Securities and Futures Commission in September already indicated reduced and altered account balances. Therefore, it remains unclear whether the recent forced conversions are related to these earlier issues or the DAO plan. Additionally, the scale at which JPEX is converting user assets remains unknown, leaving users uncertain about the future of their funds.
JPEX has been facing significant challenges since the Hong Kong Securities and Futures Commission published a warning in September, alleging that the exchange was operating without registration. Following the warning, authorities have arrested numerous individuals associated with JPEX, including social media influencers. Moreover, telecom companies have blocked access to the platform, and JPEX’s third-party partners have denied the company access to its assets. In response to these difficulties, JPEX has suspended some of its services and advised Hong Kong users to stop depositing assets, while affirming its intention to remain operational.
The controversial actions of JPEX in restricting user withdrawals and implementing a DAO have raised concerns among cryptocurrency users. The conversion of user balances to a non-withdrawable cryptocurrency, alongside unclear disclosure and communication from JPEX, has further contributed to the dissatisfaction and uncertainty surrounding the exchange. As JPEX continues to navigate regulatory issues and faces ongoing scrutiny, it remains to be seen how the situation will unfold and what the future holds for both the exchange and its users.