Ex-employee alleges smaller exchanges use platform tokens to lock in user funds

A former employee who said the person had worked at three crypto exchanges — WebSea, JuCoin and CoinUP — alleged some smaller exchanges attract user funds through platform tokens and then restrict withdrawals, according to Wu Blockchain. The former employee claimed some exchanges use rising platform token prices, discounted token sales, high-yield products, copy trading and multi-tier agent structures to keep user funds tied to their platforms. The person also alleged that during WebSea’s 2024 crisis, withdrawals for ordinary users were restricted while employees were still able to withdraw funds. At JuCoin, withdrawals above the original deposit amount were allegedly difficult to get approved, and profits were sometimes deducted, according to the account. At CoinUP, some team leaders or agents were allegedly required to buy the platform token CPX, after which the token’s price later plunged. The former employee added that in a bear market, some smaller exchanges may rely more heavily on platform tokens and high-yield products to draw in users, while warning users to be cautious about claims of principal protection, high returns and discounted token sales.