Smaller Exchanges Use Platform Tokens to Lock in User Funds

A former employee of three crypto exchanges has come forward with allegations that smaller platforms use platform tokens to attract user funds and restrict withdrawals.

The ex-employee claimed to have worked at WebSea, JuCoin, and CoinUP, alleging that these exchanges employ a mix of strategies to keep user funds tied to their platforms.

These tactics include rising platform token prices, discounted token sales, high-yield products, copy trading, and multi-tier agent structures.

During WebSea's 2024 crisis, ordinary users faced withdrawal restrictions while employees could still access their funds. At JuCoin, withdrawals exceeding the original deposit amount were reportedly difficult to get approved, and profits were sometimes deducted.