OX tokens plummet amid OX Fun extortion, insolvency of 3AC founders and rumors
OX.FUN is a crypto-derivatives exchange that has ties to Three Arrows Capital founders Su Zhu, Kyle Davies and the bankrupt Three Arrows Capital. Allegations of financial misconduct have led to OX.FUN being criticized.
The controversy started after JefeDAO claimed that the platform had withheld 1 million dollars from him, causing concerns about financial stability and operational transparency.
This drama has negatively impacted the exchange’s native OX token, down more than 35% in the last 24 hours to $0.00875 as of press time, according to CryptoSlate’s data.
Extortion claims
On Feb. 24, OX.FUN accused JefeDAO of engaging in illegal market manipulation, which is contrary to the platform’s terms of service.
JefeDAO is said to have deposited $1,000,000 USDC at the exchange on 14th February and started aggressive trading in minutes. The user placed large limits orders at prices lower than market, forcing JAILSTOOL tokens to fall in value before closing out short positions for a profit.
OX.FUN said it responded to this action by freezing the user’s funds, citing a violation of its terms of service. JefeDAO, according to the platform, had pressed the exchange via social media for the release of the funds. The exchange stated that the trader had rejected a settlement proposal.
JefeDAO, however, has denied these allegations, accusing this exchange of extortion.
He said that the platform offered to release the frozen funds for free in exchange for five month’s promotion. Online screenshots suggest that the platform intended to return the funds in monthly increments of $200,000, if JefeDAO publicly endorsed the exchange.
Many in the crypto-community have criticized these allegations. The FUN team was unprofessional.
Industry figures also questioned the use of a platform that is associated with Su Zhu given his controversial history in the crypto-space.
Ox.Fun’s financial health
As the dispute unfolds, doubts about OX.FUN’s financial health has intensified on social media.
Conor Grogan revealed that data from the on-chain suggests Coinbase holds less than $1.7million in non-OX assets. If the $1 million USDC withdraw request that is pending is processed, then its USDC reserve could fall to only $1,000.
Grogan’s analysis also indicated that OX. FUN’s Ethereum Gnosis safes are nearly depleted, with the remaining assets primarily consisting of obscure tokens such as FWOG and SLERF.
He said that the exchange was withdrawing liquidity from its liquidity pools, selling SOL in order to purchase USDC and buying OX tokens.
Meanwhile, Grogan noted:
“There is a chance that they have untagged wallets I’m unaware of/not able to track.”
More speculation about OX. FUN’s financial health emerged after reports of significant withdrawal outflows.
A viral message purportedly from an ex-employee suggested that only $180,000 of the funds were still available to withdraw. The message also hinted on internal struggles to distribute last funds.
OX.FUN, despite these reports, has denied the rumors of insolvency, stating that withdrawals continue to be processed as normal. It did not, however, address the allegations of layoffs and remaining liquidity.
