Allegations of Financial Misconduct at OX.FUN
OX.FUN, a crypto derivatives exchange associated with the bankrupt Three Arrows Capital co-founders Su Zhu and Kyle Davies, is facing scrutiny over accusations of financial misconduct. The platform came under fire after allegedly withholding $1 million from a user named JefeDAO, raising concerns about its financial stability and operational transparency.
Extortion Claims
On February 24, OX.FUN claimed that JefeDAO engaged in illegal market manipulation by depositing $1 million USDC and executing aggressive trades within minutes. The user allegedly placed large limit orders at below market prices, leading to a decrease in the value of JAILSTOOL tokens before profiting from short positions. OX.FUN responded by freezing the user’s funds, citing a violation of its terms of service. The platform accused JefeDAO of pressuring them through social media to release the funds, which the trader refused.
JefeDAO countered these allegations by accusing OX.FUN of extortion. Screenshots circulating online suggest that the platform offered to release the frozen funds in exchange for five months of free promotion, returning the money in monthly increments of $200,000 if JefeDAO publicly endorsed the exchange.
Concerns Over Financial Health
As the dispute unfolded, doubts about OX.FUN’s financial health increased on social media. Conor Grogan, a director at Coinbase, revealed that on-chain data indicated the exchange holds less than $1.7 million in non-OX assets. If a pending $1 million USDC withdrawal request is processed, the reserves could drop to just $1,000.
Grogan’s analysis also highlighted that OX.FUN’s Ethereum Gnosis safes are nearly depleted, with remaining assets mainly consisting of obscure tokens like FWOG and SLERF. The exchange has been withdrawing liquidity from pools, selling SOL to acquire USDC, and purchasing OX tokens.
Speculation about OX.FUN’s financial health persisted after reports of significant withdrawal outflows. A former employee’s viral message suggested that only $180,000 remained for withdrawals, hinting at internal struggles to distribute the remaining funds.
Despite these reports, OX.FUN denied insolvency rumors, claiming that withdrawals are processing normally. However, the statement did not address allegations of layoffs or remaining liquidity levels.
