- Allegations against MEXC continue to mount.
- Users report arbitrary account restrictions with no explanation.
- Wider allegations around systemic conflict of interest are also circulating.
The cryptocurrency industry has been rocked by the stunning collapse of several big-name exchanges, including Celsius and FTX, due to unethical practices. As the industry struggles to rebuild trust, another exchange, MEXC, faces mounting allegations of fraud and arbitrary account restrictions.
MEXC in the Firing Line
The latest allegations against MEXC come from trader “Hashmoney,” who held a spot account with the exchange for more than three years but began using the platform for futures trading in November 2023, growing an initial $300 balance to $14,000. Things turned sour in late December 2023 following the closure of a profitable SEI trade. Hashmoney soon discovered he was unable to open new trades or withdraw funds.
Hashmoney contacted customer support to resolve the matter and was asked to submit video identification to satisfy the company’s risk control procedures. While the trader complied, MEXC responded with a 60-day account lock notice, leaving him unable to amend ongoing live trades.
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Hashmoney claimed that MEXC ignored his support tickets, asking for an explanation of the account restriction, leaving him in the dark about what was happening. Worse still, unable to close live trades, the January 3 “Bitcoin ETF rejection” crash liquidated the majority of his account.
While Hashmoney’s account already brings cause for concern, his case takes on more troubling dimensions in light of wider accusations that claim the exchange has a conflict of interest rooted in its trading operations.
Conflict of Interest
“MDX,” the founder of the MDXAlgo trading platform, recently posted alarming allegations regarding the trading operations behind MEXC. MDX claimed that the exchange is motivated to restrict the accounts of winning traders because it acts as the broker to facilitate the trade and the market maker taking the other side of the customers’ trades.
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“For MEXC to offer the type of products they offer and not disclose that they're operating as a broker is an extreme RED FLAG in trading and is obviously 100% illegal in the tradfi space,” remarked MDX.
MEXC’s business model is to offer “an insane amount of new altcoins” to chase new users, commented MDX. However, many new altcoins lack volume and liquidity, prompting MEXC to stump up the liquidity and act as market makers. This conflict of interest becomes a problem when traders make “abnormal profit” at the expense of MEXC.
MDX has stated that the extent of the issue is unknown but drew parallels with FTX and “another SBF-style scam.” As a result, MDX recommends that traders avoid using the exchange.
DailyCoin contacted MEXC for comment on Hashmoney’s case and allegations of undisclosed conflict of interest. No reply was received at the time of press.
On the Flipside
- MEXC serves 10 million users compared to Binance’s user base of 128 million, making MEXC a smaller player.
- Cryptocurrency exchanges broadly operate in a regulatory gray area, with emerging standards and oversight.
Why This Matters
While MEXC’s specific account of Hashmoney’s case remains unknown, swirling allegations of fraud and opaque account closures do little to instill confidence in crypto exchange practices. Though regulators worldwide continue facing backlash for supposedly excessive oversight of cryptocurrencies, episodes hinting at predatory behavior lend credence to calls for firmer guardrails.
Read about the MEXC CEO deleting his X account as fraud allegations mounted:
MEXC Spurns FUD Over CEO X Account and Frozen Asset Claims
Find out more on the increasingly stringent requirements coming from UK regulators here:
Is FCA’s Crypto Competency Test Valuable? UK Users Say No
