Ex-employee alleges smaller exchanges use tokens to restrict withdrawals

A former employee claimed that smaller crypto exchanges, including WebSea, JuCoin, and CoinUP, attract user funds through platform tokens and then restrict withdrawals. The employee alleged that these exchanges utilize rising token prices, discounted sales, high-yield products, copy trading, and multi-tier agent structures to keep user funds tied to their platforms. During WebSea's 2024 crisis, ordinary users faced withdrawal restrictions while employees could still withdraw funds. At JuCoin, approvals for withdrawals exceeding the original deposit amount were reportedly difficult, with profits sometimes deducted. CoinUP allegedly required team leaders or agents to purchase the platform token CPX, which later saw a price drop. The former employee warned that in a bear market, smaller exchanges may increasingly depend on platform tokens and high-yield products to attract users, advising caution regarding claims of principal protection, high returns, and discounted token sales.

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