OX.FUN Rejects Insolvency Claims as Users Report Frozen Funds

Highlights:

• OX.FUN has denied insolvency claims and says all withdrawals are processing normally.
• JefeDAO accused OX.FUN of freezing $1 million USDC while the exchange claims JefeDAO tried to manipulate the market.
• Crypto users urge withdrawals as concerns grow over OX.FUN’s liquidity with most funds held in OX tokens.

Crypto exchange OX.FUN has denied allegations of insolvency in the wake of widespread concerns that users are unable to withdraw funds. All withdrawals, the exchange said, are processing normally and dismissed the claims as ‘coordinated FUD.’ Earlier reports had indicated that $1 million USDC had been frozen and that the company’s available liquidity had dropped to just $180,000.

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The controversy started after X discussions suggested OX.FUN was in a financial crisis. Screenshots of messages shared by users from former employees claimed the platform has become insolvent. The fears deepened after users made direct comparisons between OX.FUN and the recent Bybit hack.

How the Allegations Started

The crisis took a new turn when JefeDAO, an NFT artist and trader, accused OX.FUN of freezing funds without explanation. According to JefeDAO, one of its members deposited $1 million USDC into the exchange but was later unable to withdraw the funds. OX.FUN later alleged that JefeDAO had attempted an “oracle manipulation attack.”

One of our DAO members deposited $1m USDC into @OXFUNHQ last week.

A few hours later, we attempted to withdraw funds and they were locked. They stated that we “violated terms of service” but won’t tell us what we did. pic.twitter.com/R9RyQzaDoc

— jefeDAO (@thejefedao) February 21, 2025

OX.FUN claimed that JefeDAO deposited the funds on February 14, 2025, and shortly after, aggressively sold JAILSTOOL tokens. Large limit orders were reportedly placed below the fair market price—one at $0.048 worth $600,000 and another at $0.045. This activity allegedly drove the token’s price down to $0.034, allowing JefeDAO to close short positions at a lower price.

OX.FUN stated that JefeDAO’s behavior was against its terms of service. As a result, his funds were frozen. The terms of service of the exchange prohibit market manipulation and oracle attacks. 

Counterclaims and Fraud Accusations

In response, JefeDAO denied the accusations and alleged that OX.FUN was engaging in fraud. JefeDAO claims the exchange asked for promotion on social media in return for the release of the frozen funds. This demand, according to JefeDAO, was unethical, and he stated that they would keep posting until the funds were returned. 

Amid growing controversy, Coinbase’s head of product, Conor Grogan, noted that the majority of OX.FUN’s wallets contained their own OX coins. He added that if the exchange processed a pending $1 million USDC withdrawal, its USDC balance would drop to around $1,000. This raised further concerns about the exchange’s actual liquidity.

The saga around OX.FUN has caused a split reaction in the crypto community. While some in the crypto community support the exchange, others have advised the users to withdraw their funds immediately. According to on-chain data, the exchange had around $1 million in funds, most of which were locked in its protocol token instead of USDC.

Some cryptocurrency users have questioned the decision of the platform to request social media promotion for the release of the money. Other users believe the exchange is not going to return the money, while some members see it as a damage control attempt. The exchange continues to deny any wrongdoing, leaving the controversy unresolved as both sides maintain their positions.

.@nicodotfun the founder of @OXFUNHQ DMd us saying the only way to get the $1m USDC that they stole back is to give them free promotion for 5 months

I literally know this is 100% fraud just based on the fact that it is highly unusual and suspicious for an exchange to request… pic.twitter.com/dNyIpBjMJA

— jefeDAO (@thejefedao) February 23, 2025

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