JPEX’s “DAO Stakeholders Dividend Plan” gains 70% user approval in public vote, lawmaker warn of potential risks for shareholders

Hon Edmund Wong Chun-sek

23rd September 2023 – (Hong Kong) In a recent development, JPEX, the controversial virtual asset trading platform under suspicion of operating without a licence in Hong Kong, introduced the “DAO Stakeholders Dividend Plan” for user subscription. The plan claims that after a two-year lock-up period, shareholders can convert 100% of their dividends into an equivalent amount of Tether (USDT). The user voting for the scheme started yesterday (22nd), with JPEX announcing that 70% of participating users have expressed agreement, although the number of voters was not disclosed.

Hon Edmund Wong Chun-sek, a Legislative Council Member representing the Accountancy Functional Constituency, voiced his concerns about the scheme during a radio program today (23rd). He highlighted that under the proposed scheme, investors would receive a maximum dividend of only 49%, indicating that JPEX retains significant control. Wong advised investors to be cautious, emphasising that transitioning from creditors to shareholders does not guarantee the retrieval of their investment funds. In the event of company debt, shareholders might even face potential liabilities. The ongoing JPEX suspected fraud case has resulted in the arrest of at least 11 individuals, with approximately 2,265 reports filed, involving a total amount of around HK$ 1.4 billion.

According to JPEX, the scheme promises to distribute 49% of the dividends to DAO shareholders, with a total value of approximately 400 million Tether (equivalent to around HK$3.129 billion) available for external subscription and redemption. Existing users can exchange their assets stored on the platform for dividends at a 1:1 ratio, while the platform only offers a 1% repurchase rate. This means that for every 10,000 dividends held, shareholders can redeem 100 Tether. After one year, the repurchase rate increases to 30%, and only after two years can shareholders redeem the full amount at 100%.

JPEX stated that as of 8pm last night, 70% of voting users had approved the scheme, while the remaining 30% did not accept it. However, no details regarding the number of voters were provided. The public voting will continue until next Thursday (28th) at 8pm, at which point a decision will be made regarding the implementation of the scheme.