Cryptocurrency exchange OKX has raised alarms over potential risks associated with transferring funds from MEXC Global. This advisory comes after recent actions by U.S. regulators that may impact compliance for incoming deposits.
Compliance Concerns Prompt Warning
Star Xu, the founder of OKX, urged customers on social media to refrain from direct transfers from MEXC, citing potential freezes on deposits due to enhanced scrutiny. This warning followed reports of stablecoin deposits flagged for risk review.
Please avoid transferring funds directly from MEXC to OKX. OKX treats FinCEN special measures with a level of caution similar to sanctions.
Star Xu, OKX Founder
Xu highlighted that OKX has implemented stricter compliance measures immediately, indicating that funds linked to MEXC could be subject to freezes.
MEXC's Assurance of Stability
In response, MEXC CEO Vugar Usi assured users that the platform continues to operate normally, despite a significant outflow of over $120 million following the U.S. announcement.
Deposits and withdrawals on MEXC have continued to operate smoothly. We have indeed seen an increase in withdrawal volumes, but everything has remained orderly.
Vugar Usi, MEXC CEO
Usi also mentioned that MEXC has been reclassified back to its standard risk category by blockchain analytics firm Elliptic after a temporary elevation.
Regulatory Actions and Background
The friction stems from a recent order by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), which designated MEXC a primary money laundering concern. This measure affects U.S. financial institutions' ability to transact with MEXC.
Challenges in Southeast Asia
MEXC is facing increasing regulatory hurdles in Southeast Asia, including a warning from the Philippine Securities and Exchange Commission against using the platform. The SEC's advisory led to the removal of MEXC's app from domestic stores earlier this year.
Despite these challenges, MEXC has sought to expand its presence by investing in regulated exchanges, such as acquiring a stake in Indonesia's Triv.