‘Market manipulation’ and ‘insolvency’ claimed as JefeDAO and OXFUN fight

The Su Zhu and Kyle Davies-backed crypto exchange OXFUN claims it has suffered an “oracle manipulation attack” at the hands of a user spreading “coordinated FUD” about insolvency. 

OXFUN accused JefeDAO of aggressively selling Dave Portnoy’s JAILSTOOL memecoin after depositing $1 million worth of USDC. It claims that JefeDAO pushed the market low and closed his short positions as low as 0.0034 during the “attack.”

Read more: Solana loses a third of its market cap — is memecoin season officially over?

Today, OXFUN said, “This behavior is explicitly against our Terms of Service, is against the interest of other users of OXFUN, and thus his funds are frozen.”

OXFUN deflected criticism of this stance, even calling one user “retarded” after they claimed JefeDAO’s trading wasn’t illegal and instead just arbitrage or hedging.

Chainalysis notes that an oracle manipulation attack involves using large amounts of crypto to inflate the trading volume of low-liquidity tokens and in turn increase prices that may not be reflected in the wider market.

OXFUN and JefeDAO’s weekend feud

This dispute began on February 21 when JefeDAO revealed that the exchange had frozen $1 million of deposited funds while citing a violation of its terms of service. JefeDAO was then blocked from most of OXFUN’s accounts and repeatedly told they had violated OXFUN’s terms.

JefeDAO then revealed that OXFUN’s founder “Nico” tried to negotiate a deal whereby JefeDAO would have to promote the crypto exchange daily and confirm the situation was good in order to receive their $1 million back over five months.  

They said, “I literally know this is 100% fraud just based on the fact that it is highly unusual and suspicious for an exchange to request the promotion of their social media accounts as a condition to return someone’s funds.” 

The exchange rejected insolvency rumours yesterday and said JefeDAO helped coordinate them. “Jefe is attempting to increase the pressure on social media to receive his proceeds from crime, these tactics will not work,” OXFUN stated. 

Read more: 3AC co-founder Su Zhu sent to prison for 4 months in Singapore

Indeed, the insolvency claim from “part-time satirical shitposter” @stevie_ravioli said the exchange had $180,000 USD left. Arkham shows that the exchange is currently holding $1 million in its portfolio. Over $979,000 of this is made up of OX tokens while $21,000 and $9,000 are made up of Ether and OX Coin respectively.  

Protos has reached out to OXFUN, its founder Nico, and JefeDAO for comment.

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