Key Takeaways
- FinCEN cut MEXC from the US financial system for allegedly processing $16B for sanctioned foreign actors.
- In response, OKX immediately restricted direct transfers from MEXC and began freezing affected user funds.
- MEXC claims operations remain smooth as it works with analytics firms to restore its safe address status.
MEXC Customers Face Transaction Holds After U.S. Treasury Blacklist Exchange
The U.S. Treasury Financial Crimes Enforcement Network (FinCEN) recently took action against MEXC, a top 20 cryptocurrency exchange, and it is starting to affect its customers.
MEXC users are complaining about deposit holds on exchanges like OKX when making direct transactions from their accounts after FinCEN issued an order cutting MEXC off from the U.S. financial system for serving as what the institution labeled a “hub for sanctioned actors,” processing over $16 billion for entities in Iran, Russia, and North Korea, even as the company recently cut support for users in Russia and Belarus.
Social media reports that called this situation into attention surged on social media, with users claiming that their deposits were frozen “under the vague excuse of coming from a ‘potentially high-risk address.’”
“We are not criminals. We are ordinary crypto users transferring our own assets between exchanges,” the user reiterated.
Star Xu, founder and CEO of OKX, clarified that while the FinCEN order only prohibited U.S. financial institutions from engaging in any transmittal of funds from or to MEXC Global, and that there was a 30-day transition period, the exchange had “already significantly strengthened its controls rather than waiting until the deadline.”
“OKX treats FinCEN special measures with a level of caution similar to sanctions. Under our compliance controls, funds associated with affected platforms may be frozen, and related accounts may be subject to further investigation,” Xu stressed, calling on users to avoid transferring funds directly from MEXC.
MEX CEO Vugar Usi stressed that operations at the exchange continue to run smoothly, even with increased withdrawal volumes. The company is working with analytics providers like Elliptic to remove the special risk classification from its addresses and return them to the original “exchange” category.
“I would like to stress that we take the concerns raised in FinCEN’s order seriously. We intend to engage constructively with FinCEN and have begun an independent review of our AML and sanctions controls,” he concluded.
Nonetheless, more users are worried about the status of their cryptocurrency wallets, wondering if just having interacted with MEXC addresses at some point would put their funds at risk without receiving a clear answer.
Before FinCEN’s designation, MEXC experienced a relevant rise in tokenized trading, with AI asset spot volume surging 88% and tokenized U.S. stock spot volume jumping 81% in September.
