Troubled cryptocurrency exchange JPEX has moved forward with a plan that would purportedly transform the platform into a decentralized autonomous organization (DAO) and convert user assets into dividend shares with an incentive to lock them up for two years.

JPEX said in an Oct. 4 announcement that voting on its DAO shareholder dividend plan was completed on Sept. 28, claiming that 68% of users voted in favor of the plan.

The program allows users to convert their currently frozen assets into DAO Stakeholder Dividends at a 1:1 ratio. JPEX offers a buyback option at 30% of the conversion price after one year and a 100% buyback option after two years.

JPEX said in an earlier announcement that users who agree to the plan will receive dividends from JPEX through new token listings, trading fees and distribution of JPEX Coin (JPC), the exchange’s native token, in proportion to shareholder dividends.

The scheme appears to incentivize users to keep their funds on the troubled exchange, which is facing liquidity issues.

However, an unnamed JPEX user told the South China Morning Post (SCMP) in a report on Oct. 4 that her assets appeared to have been converted without her consent or prior knowledge.

She claims that she and other users discovered they could no longer withdraw their assets after JPEX announced it was going ahead with the scheme.

The Hong Kong Police and the Hong Kong Securities and Futures Commission have formed a joint task force to combat illegal cryptocurrency trading activities. Meanwhile, the JPEX scandal continues to unfold. https://t.co/lOBRNlLs7m

— CoinTelegraph (@Cointelegraph) October 5, 2023

“All my [Tether] USDT and other cryptocurrencies are gone,” the person said, claiming her assets were converted to JPC, a low-liquidity token with few use cases.

“Some other users who held tokens and other assets also saw them moved,” the user said, adding, “Given the unknown price and impossibility of withdrawal, our assets are now just waste paper.

It is unclear whether those cited in the report voted in favor of the plan, but some JPEX users previously told the South China Morning Post that they were forced to accept the plan because there was no option to vote against it on their app.

JPEX did not immediately respond to Cointelegraph’s request for comment.

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JPEX’s dividend plan comes as Hong Kong police arrested multiple people associated with the exchange after it was accused by the region’s securities regulator of operating an unauthorized crypto platform.

Hong Kong police said the Dubai-based exchange defrauded at least 2,300 people of HK$1.4 billion ($178 million).

Earlier on Oct. 4, the region’s police and securities regulators formed a cryptocurrency-focused task force to combat illegal activities on cryptocurrency exchanges.

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