Hong Kong JPEX crypto scandal: dividends plan by defiant platform prevents users from withdrawing assets

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Embattled cryptocurrency platform JPEX has pressed on with a move to convert stored user assets into shareholder dividends which can only be claimed in two years, while Hong Kong police have arrested a 19th suspect linked to the growing scandal. A JPEX user on Wednesday morning told the Post she and some victims of the biggest local case of alleged digital currency fraud could no longer withdraw their assets, hours after the company announced it would proceed with the plan to raise cashflow and retain investors. “All of my USDT [Tether tokens] are gone, all transferred to JPC … Some other users holding the tokens and other assets have also found them transferred,” the user who preferred to remain anonymous said, adding they were not informed of the exchange price of JPC, the platform’s own digital currency. Tether is a stablecoin, a type of cryptocurrency designed to remain at a stable price point. Each USDT is worth US$1. “Given the unknown price and the impossibility of withdrawal, our assets have now become just waste paper,” the user said. In an announcement on early Wednesday, JPEX said a referendum it held with users was completed last week, with 68 per cent voting in favour of the dividends plan. “As a platform, we highly respect the decision made by our users,” it said, adding that it had begun to “progressively implement” the “DAO Shareholder Dividend Scheme” starting October 4. “Currently, our team is actively negotiating with third-party market makers and aiming to release funds promptly for the platform’s [adjustment] work. We also commit that, after the programme’s implementation, all profits apart from the dividend portion will be used for repurchasing DAO dividends held by users.” DAO, which stands for “decentralised autonomous organisation”, is an entity in which all members participate in decision-making through voting mechanisms on a blockchain. Hong Kong police arrest duo over JPEX scandal after they are returned by Macau Under the plan, investors will convert their funds into DAO stakeholder dividends at a 1:1 ratio which can be claimed two years later. Those adding fresh assets under the plan were told they could get twice the payout. The dividends to be given to users would be in various forms, including as listing fees of new platform tokens, trading fees generated by spot and derivative products, and corresponding JPEX coins based on the proportion of the shareholder’s dividends, JPEX said. The company also said earlier it would distribute 49 per cent of the stakeholder dividends, with a total value of US$400 million (HK$3.1 billion). Hong Kong to reveal crypto applicants’ names as JPEX scandal worsens But users previously told the Post they had been forced to accept the plan since there was no option to vote against the proposal on the platform’s app. The scheme was also slammed as suspicious by finance analysts who said it would only be economically viable if there were prospects that the entity would deliver. The saga surrounding Hong Kong’s biggest alleged case of financial fraud, involving assets worth more than HK$1.5 billion, emerged last month after the city’s securities watchdog named JPEX as an unlicensed platform, accusing it of suspicious activities. Hong Kong security chief vows to hunt down ringleaders of JPEX crypto scandal The latest dividends move by the company came as police arrested a 19th suspect linked to the case on Wednesday morning. A 28-year-old man was escorted away from his flat at housing estate The Bloomsway in Tuen Mun, while officers also impounded his grey Porsche, according to a source familiar with the case. Officers from the commercial crime bureau also raided another location at Nam Hang Tsuen in the Tai Tong area of Yuen Long on the same day, where they towed away a white Porsche believed to have been bought with criminal proceeds, the same source added. The force said earlier it had arrested people “relatively close to the core” of JPEX and were tracking down other fugitives in connection with fraud and money-laundering offences. More than 2,400 complaints against the trading platform have been received by the force so far.

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