JPEX crypto exchange team converted the platform into a DAO platform & converted the customers’ funds into a low liquidity & useless crypto coin “JPC”.
JPEX was an averagely popular Japan-based crypto exchange, founded in 2018. In mid of Sep of this year, the Hong Kong financial regulators issued an order against this exchange and confirmed that the exchange has no regulatory approval to run the exchange. Following the news, the majority of the big players dragged their funds from the platform & as a result of it JPex platform started to face a liquidity crisis. In the last week of Sep, the exchange halted fund withdrawal services. More than $170 million worth of crypto assets are frozen on this exchange.
Nearly a week ago, JPEX announced that it would ask for vote support from the customers to know whether they would go with the JPEX Decentralised Autonomous Organisation (DAO) plan to return funds back or not. At the time exchange confirmed that it would only provide refund program access to those customers who will vote in favour of exchange refund scheme.
On 28 Oct, JPEX announced that 68% of people supported it through a vote procedure and now it will convert all the customers’ funds into JPC coins, the native token of JPEX exchange which has very little liquidity.
Under this plan, the exchange swapped user assets to dividend shares like a system with an incentive to lock them up for two years and the majority of the reports found that JPex customers are not happy with this plan, as the JPC coin is useless, no use case & no liquidity in the market.
According to several local media reports, JPex swapped customers’ funds in Jpc coins without the customer’s consent and the customers are opposing JPex’s decision. In short, there was no option for the customers, while the exchange claimed that it would provide a choice for the customers, as per reports.
Following the reports of the JPEX scandal, Hong Kong police and the city’s Securities and Futures Commission have formed a joint task force to crack down on illegal crypto exchange activities running in the Hong Kong jurisdiction. In short JPex’s scandal will bring new strict rules for crypto companies to prohibit potential illegal activities linked with cryptocurrencies.