MEXC under pressure: Exchange grapples with effects of mass withdrawals

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Oleg Tkachenko

04.11.2025

MEXC under pressure: Exchange grapples with effects of mass withdrawals — Investor panic tests MEXC’s stability

Over the weekend, crypto exchange MEXC found itself at the center of user panic. A series of viral social-media posts alleging withdrawal issues triggered a chain reaction — users began pulling their funds en masse amid fears of a possible liquidity crunch.According to various media and analytics reports, total outflows over a short period reached between $2.3 billion and $5.5 billion. The incident delivered a major blow to MEXC’s reputation, long regarded as one of the market’s more stable trading platforms.

From a single incident to a market-wide stress test

It all began with a trader known as The White Whale, who on August 24 publicly claimed that MEXC had frozen more than $3 million of his funds “without warning, without explanation, and without a single Terms of Service violation.”

On X, he wrote that the exchange accused him of “suspicious activity” only after he had earned over $5 million in three months. “My only conceivable offense? I was too profitable,” he said, adding that MEXC told him the “review process” could take up to a year — “a convenient way to hold my money hostage indefinitely.”

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In later posts, The White Whale described a one-hour call with MEXC representative Cecilia Hsueh, who he said admitted that the exchange’s “risk-control system is broken,” yet confirmed his funds remained under review. While MEXC executives later issued a public apology, the trader stated that his money “still hasn’t been released.”

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His story spread rapidly across X under the hashtag #FreeTheWhiteWhale, fueling growing doubts about MEXC’s liquidity and transparency. One high-profile case was enough to trigger a wave of user withdrawals — a textbook example of how, in the post-FTX era, even a hint of instability can ignite a full-blown crisis of confidence.

Mass withdrawals and a test of trust

Why did users start pulling their assets from the exchange? At first, it was simply to make sure MEXC was operating without restrictions. These small “test withdrawals” quickly spiraled out of control: the more transactions hit the network, the stronger the sense of risk became. On-chain monitoring platforms recorded a short-term drop in liquidity across several pools — another red flag for cautious traders.

MEXC explained that some transactions had been temporarily paused due to “anomalous activity” alerts but provided no further details. The vague communication did little to calm the community — even users who had no issues withdrawing began to move funds “just in case.”Despite the scale of outflows, there was no evidence of systemic account freezes. Most reports referred to isolated cases of delays which, under intense information pressure, created a classic bank-run effect — when panic itself becomes the driving force of risk.

MEXC’s official response

Amid the chaos, MEXC publicly denied the insolvency rumors, calling them “groundless and misleading.” In its official statement, the exchange emphasized that it remains in a “healthy financial position” and that all user assets are “fully backed by reserves.”

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According to MEXC’s updated Proof of Reserves, coverage for key assets exceeds 100% — approximately 129% for USDT, 128% for USDC, 125% for BTC, and 105% for ETH. These figures, the company said, demonstrate the platform’s ability to meet all customer obligations even under heightened withdrawal pressure.The management acknowledged that the account-freeze incident was caused by an internal review error and once again issued an apology to users. MEXC pledged to improve its customer identification and support procedures to prevent similar situations in the future.

The exchange also announced an upgrade to its Merkle Tree Proof of Reserves system and the preparation of an independent audit, enabling users to verify that their assets are fully reflected within the platform’s overall reserves. According to the company, these steps aim to “enhance transparency and reduce the risk of market panic.”

Market reaction: pressure on trust and liquidity

The MEXC incident coincided with a period of heightened market sensitivity to any signs of instability. Investors still remember the collapses of FTX, Celsius, and Voyager — meaning that even brief communication lapses are now perceived as potential red flags.

According to CoinGape analytics reports, withdrawal volumes from MEXC reached their highest levels since 2023. While the exchange continues to operate normally, it now faces intense market scrutiny — where even minor delays or policy adjustments quickly draw community attention.

What the MEXC incident means for users and the market

For MEXC, the incident became a real test of resilience. The mass withdrawals not only created short-term liquidity pressure but also dealt a significant reputational blow. Even if the exchange’s reserves remain intact, the loss of user confidence alone could affect its long-term standing among centralized platforms.

The MEXC case once again underscored a simple truth of the crypto industry: reputation carries as much weight as technology. When users begin to doubt a platform’s transparency, even the strongest players can quickly find themselves in a risk zone.

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