MEXC Addresses Missing Funds Concerns Amidst Allegations of ‘Clawbacks’

Tim Hakki
Last updated: | 2 min read
MEXC customers say the exchange helps itself to their funds.

The MEXC exchange denies any accusations that it has arbitrarily confiscated customer money.

According to a Coin Telegraph report, several MEXC users have recently complained on social media of random “clawbacks” or centralized withdrawal freezes and liquidations of funds.

User “Al Gore Rhythms” had $33,658 deducted from his spot account. When he pressed customer service about the deduction, a representative told him that MEXC had “taken measures to recover the losses incurred” due to “abnormal trading activities.”

Al Gore Rhythms shared some supporting evidence with the publication to back his claim that the exchange had deleted transactions from his transaction history, but it was not able to entirely verify his claims from them.

There have been reports of MEXC freezing customer accounts and seizing funds at least since early May when crypto fan @cryptonator1337 tweeted that several people he knew were affected. 

More allegations of arbitrary MEXC customer clawbacks came at the end of February, with a tweet that the exchange promptly replied to. The tweet included a screenshot provided by trader CoackKCrypto who claimed the exchange pilfered him for $330,000 “due to abnormal profit”.

Coin Telegraph also reported two alleged incidents of MEXC freezing customer accounts and liquidating their trades.

One of which was Hashmoney’s case, which gained traction on X.

The exchange again replied promptly and promised Hashmoney “further investigation,” although there has been no update in the last two months.

MEXC and Other Offshore Exchanges

MEXC is an offshore exchange, like Binance, which means that it doesn’t get the same regulatory scrutiny as a publicly listed US company like Coinbase.

Many regulators and lawmakers are keeping a closer eye on the exchanges servicing US customers after the FTX collapse wiped out what was left of the crypto market following Terra’s collapse in 2022.

Multiple enforcement entities are investigating Binance for various alleged offenses relating to money laundering and fraud, including the Department of Justice, the Internal Revenue Service, the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Stories of withdrawal freeze in the industry immediately call to mind the thick of crypto winter, when lenders and companies like Celsius, Voyager, and Vauld all froze customer funds to stop bank runs before filing for bankruptcy.

Still, many within crypto believe that these are hard lessons for the industry, but they serve as a reminder of the need for crypto to get back to its founding ethos of decentralization.