TLDR:
- OX.FUN crypto exchange faced accusations of insolvency and $1M USDC frozen funds, but strongly denied these claims stating all withdrawals are processing normally
- The exchange is backed by Three Arrows Capital co-founder Su Zhu and accused NFT artist JefeDAO of market manipulation and spreading “coordinated FUD”
- JefeDAO claims inability to withdraw $1M USDC deposit, while OX.FUN alleges he violated terms of service through oracle manipulation of JAILSTOOL token
- Exchange founder Nicolas Bayle allegedly offered to return JefeDAO’s funds in exchange for daily social media promotion
- Coinbase’s head of product raised concerns that OX.FUN’s wallets primarily hold their own OX tokens, with USDC balance potentially dropping to $1,000 after pending withdrawal
A dispute between cryptocurrency exchange OX.FUN and NFT artist JefeDAO erupted on February 24, 2025, centered around frozen funds and allegations of market manipulation. The exchange, backed by Three Arrows Capital co-founder Su Zhu, faces scrutiny over its handling of user funds and claims of insolvency.
The controversy began when JefeDAO reported that one of its members deposited $1 million in USDC to the platform but was unable to withdraw the funds. This incident sparked widespread discussion on social media platform X, with early reports suggesting a mass exodus of funds from the exchange.
Initial reports indicated that OX.FUN’s remaining liquidity had dropped to $180,000, leading to concerns about the platform’s financial stability. Several employees reportedly discussed the exchange’s insolvency status, adding fuel to the growing controversy.
OX.FUN’s founder, Nicolas Bayle, responded to these allegations with a detailed explanation of events. According to Bayle, JefeDAO made the $1 million USDC deposit on February 14, 2025, before engaging in what the exchange describes as manipulative trading behavior.
All withdrawals are processing normally. This is coordinated FUD.
No users were affected by the actions of JefeDAO aside from JefeDAO. He attempted to exploit the platform, got all of his funds frozen, and now is attempting a social media campaign.
Nico will put out a… https://t.co/jJRyFSFkiL
— OX.FUN (@OXFUNHQ) February 24, 2025
The exchange provided specific timestamps, stating that between 05:46:56 and 05:57:06 UTC, JefeDAO began aggressively selling the JAILSTOOL token. OX.FUN claims the user placed large limit orders below the fair market price – $600,000 worth at $0.048 and additional orders at $0.045 when the token’s fair price was $0.05.
According to the exchange’s statement, this activity resulted in JefeDAO trading $300,000 worth of the asset. The platform alleges these actions pushed the market price below $0.04, allowing JefeDAO to close short positions at a low of $0.034.
Terms of Service Violated?
OX.FUN maintains that this trading behavior violated their Terms of Service and worked against other users’ interests. The exchange proceeded to freeze JefeDAO’s funds in response to the alleged manipulation attempt.
JefeDAO strongly denies these accusations and has made counter-claims about the exchange’s conduct. The artist revealed that Bayle offered to return the frozen funds on the condition that JefeDAO would promote the platform daily on social media.
This unusual request for promotion in exchange for fund returns raised red flags for JefeDAO, who stated,
“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 situation has drawn attention from industry experts. Coinbase’s head of product, Conor Grogan, conducted an analysis of OX.FUN’s wallets. His investigation revealed that the exchange primarily holds its own OX tokens, suggesting potential liquidity issues.
Grogan’s analysis indicated that if OX.FUN processes the pending $1 million USDC withdrawal, its USDC balance would decrease to approximately $1,000, raising questions about the exchange’s financial reserves.
OX.FUN has consistently maintained that all withdrawals are processing normally for other users. The exchange characterizes the situation as “coordinated FUD” and insists that no users except JefeDAO were affected by recent events.
The timing of these events has drawn particular attention due to OX.FUN’s connection to Su Zhu, who serves as an advisor to the exchange. Zhu is known for co-founding Three Arrows Capital, a hedge fund that previously faced failure.
As of February 24, 2025, both parties maintain their positions. OX.FUN continues to process withdrawals while defending its actions against JefeDAO, and JefeDAO persists in challenging the exchange’s claims and seeking the return of the frozen funds.
