MEXC Responds to Issues Regarding Missing Funds Following Claims of ‘Clawbacks’

The MEXC exchange refutes any claims that it has unjustly seized customer funds.

A report from Coin Telegraph indicates that numerous MEXC users have recently voiced their grievances on social media regarding unexpected “clawbacks” or centralized withdrawal halts and fund liquidations.

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

Al Gore Rhythms provided some evidence to the publication to support his assertion that the exchange had removed transactions from his transaction history, but the publication was unable to fully verify his claims based on that evidence.

Reports of MEXC freezing customer accounts and confiscating funds have surfaced at least since early May, when crypto enthusiast @cryptonator1337 tweeted that several acquaintances of his were impacted.

The number of individuals encountering issues with @MEXC_Official in recent weeks is substantial.

They also froze the account of a friend of mine.

He deposited BTC valued in the low six-figures in USD, purchased XMR, and attempted to withdraw. The first withdrawal was successful, however, after the…

— CR1337 (@cryptonator1337) December 23, 2023

Additional accusations of arbitrary clawbacks by MEXC customers emerged at the end of February, to which the exchange responded promptly. The tweet included a screenshot from trader CoackKCrypto, who alleged that the exchange took $330,000 from him “due to abnormal profit.”

Dear Valued User,

Please be assured that users engaging in normal trading activities will not be affected. Should there be any concerns regarding our risk control measures, you are welcome to apply for an appeal. Our customer service team is available 24/7 to assist you…

— MEXC (@MEXC_Official) February 28, 2024

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

One such case involved Hashmoney, which gained attention on X.

I was unable to hedge my positions, reduce the margin, or take any action at all. I requested customer support to maintain withdrawal restrictions but at least allow me to trade to prevent my balance from liquidating. pic.twitter.com/n80AIhAGFW

— Hashmoney (@culturexbt) January 4, 2024

The exchange responded quickly and assured Hashmoney of “further investigation,” although there has been no update in the past two months.

MEXC and Other Offshore Exchanges

MEXC operates as an offshore exchange, similar to Binance, which means it does not face the same level of regulatory scrutiny as a publicly listed US company like Coinbase.

Numerous regulators and lawmakers are increasingly monitoring exchanges that serve US customers following the FTX collapse, which devastated the remaining crypto market after Terra’s downfall in 2022.

Various enforcement agencies are investigating Binance for multiple alleged violations related 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.

Reports of withdrawal freezes in the industry evoke memories of the height of the crypto winter, when lenders and companies such as Celsius, Voyager, and Vauld all halted customer withdrawals to prevent bank runs before declaring bankruptcy.

Nonetheless, many within the crypto community view these incidents as significant lessons for the industry, serving as a reminder of the necessity for crypto to return to its foundational principle of decentralization.

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