TLDR
- Su Zhu-connected exchange OX.FUN battles withdrawal freeze claims from user JefeDAO over $1 million USDC deposit
- Exchange claims user violated terms through market manipulation; user alleges improper fund retention
- Wallet analysis shows exchange holds mainly its own tokens with limited USDC reserves
- Platform denies broader withdrawal issues while facing increased scrutiny
- Case emerges amid series of recent crypto exchange security incidents
A heated dispute has emerged between crypto exchange OX.FUN and user JefeDAO over a frozen $1 million deposit, bringing fresh attention to the platform backed by former Three Arrows Capital co-founder Su Zhu.
The conflict began in mid-February when JefeDAO reported that a seven-figure USDC deposit became inaccessible on the trading platform. OX.FUN responded on February 24, 2025, through social media, declaring that withdrawals remained fully operational for all other users.
Platform founder Nicolas Bayle presented evidence suggesting market manipulation attempts by JefeDAO. According to exchange records, the user engaged in a series of trades involving the JAILSTOOL token shortly after depositing funds on February 14, 2025.
Data from the exchange shows JefeDAO placed substantial orders below market rates – specifically, $600,000 worth at $0.048 and more at $0.045, while the token traded at $0.05. OX.FUN reports these actions led to price movements that allowed short positions to be closed at $0.034.
The case took an unusual turn when JefeDAO revealed communications suggesting the exchange offered to release the frozen funds in exchange for daily social media promotion. This disclosure prompted questions about the platform’s standard operating procedures.
Trading in Troubled Waters
Coinbase executive Conor Grogan entered the discussion after analyzing OX.FUN’s blockchain footprint. His research revealed the exchange primarily holds its own OX tokens, with minimal USDC reserves that could drop to $1,000 after pending withdrawals.
Recent employee reports suggest the platform’s available liquidity has decreased to $180,000, though OX.FUN contests this figure. The exchange maintains its financial position remains solid despite these claims.
The timing aligns with broader market concerns, as fellow exchange Bybit recently faced security challenges involving Ethereum losses. This follows the major 2024 breach at WazirX, where hackers extracted $235 million in assets.
Technical analysis of the trading activity shows JefeDAO’s actions occurred within an 11-minute window, between 05:46:56 and 05:57:06 UTC. During this period, approximately $300,000 worth of JAILSTOOL tokens changed hands.
OX.FUN’s terms of service explicitly prohibit oracle manipulation tactics. The exchange points to these guidelines as justification for freezing the funds, claiming the trading pattern violated platform rules.
Market observers note that the exchange’s token, OX, has experienced price swings since the dispute became public. Trading volumes have shown irregular patterns as users monitor developments.
The involvement of Su Zhu attracts particular interest given the history of Three Arrows Capital, which ceased operations in 2022 during a market downturn. Zhu serves as an advisor to OX.FUN, connecting the platform to his previous ventures.
Exchange representatives emphasize that withdrawal services continue normally for all users except JefeDAO. They maintain that the account freeze represents an isolated response to specific rule violations rather than broader operational issues.
JefeDAO disputes the manipulation claims, arguing that legitimate trading activities triggered an improper response from the exchange. The request for social media promotion in exchange for fund access has drawn skepticism from market participants.
The controversy raises questions about exchange reserve practices and withdrawal policies. While OX.FUN defends its actions as necessary for market stability, the high concentration of native tokens in its reserves has prompted discussion about liquidity management standards.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
