MEXC faces backlash after withholding trader’s $3M – Will it regain trust?

Key Takeaways

Why did MEXC block the trader’s account?

It was placed under a “risk review” for allegedly violating trading rules. 

How did the community react to the MEXC saga?

There is a common call for users to opt for DEXs for relative safety. 

MEXC crypto exchange hit the headlines this week for reportedly refusing to allow a trader to access his $3 million. The victim, The White Whale, claimed that his account was mistakenly placed under a risk review. 

According to him, a meeting was held with the exchange’s CSO Cecilia Hsueh on 20 October to resolve the issue. However, his account has remained frozen ten days later. 

In her defence, Hsueh said they may be close to reaching an agreement with the trader. However, her comment about giving White Whale’s $3 million to the “community” sparked some backlash. 

“As I’ve said before, this is not about the money. MEXC remains fully prepared to allocate the $3 million fund for the community.”

MEXC stirs backlash

One user, Crypto Vikings, warned that the “CEX mafias” tend to keep your money whether you win or lose a trade. He posed, 

“How long till these CEX mafias to keep on exploiting their users in the name of ‘risk of investing in crypto’?”

Source: X

Others also came forward, claiming that their MEXC accounts were frozen with no clear communication or remedy. 

Unsurprisingly, this is not unique to MEXC. Several users have shared similar frustrations on OKX and other centralized platforms. Although some could be genuine compliance actions by CEXs, most have been false flags, resulting in unending reviews. 

And, that’s where decentralized exchanges (DEXs) are winning against established CEXs. One market watcher noted, 

“Stop leaving your funds in scammy CEXs. Withdraw all your funds from them, own your assets, and trade on chain.”

MEXC is the 10th largest CEX in terms of assets, according to Coinglass. In fact, despite the backlash, the exchange had positive inflows in the last 24 hours. However, ongoing issues could make DEXs more attractive to users.  

DEX is eating CEX’s lunch

Most robust DEXs, like Hyperliquid [HYPE], don’t require KYC, and you can transfer your funds at will. Additionally, everything is verifiable on-chain. 

Amid growing distrust of centralized platforms, DEXs have gained significant market share over the past few months. 

Source: The Block

In June, the DEX-CEX ratio in spot volume climbed to nearly 30%, indicating that decentralized platforms accounted for 30% of all volumes handled by top centralized platforms. 

Since 2024, the ratio has remained above 10% and has continued to rise. If the trend continues, DEXs could soon rival centralized platforms.