Crypto Advisor Exposes MEXC Exchange ‘Structural Rot’

The relationship between crypto trader White Whale and MEXC exchange began with promise but ended in dramatic public exposure. After recovering $3 million that had been confiscated from his account, White Whale offered to serve as an unpaid advisor to the exchange, hoping to help improve its operations and transparency. However, his investigation into MEXC’s practices revealed what he described as ‘structural rot’ that put customer assets at significant risk.

In a stunning reversal, White Whale publicly retracted his advisory offer, stating that something ‘sinister’ was brewing within the exchange. He characterized MEXC’s operations as ‘smoke and mirrors’ designed to maintain the appearance of legitimacy while engaging in practices that fundamentally undermine user protection. The crypto trader’s withdrawal of support represents a significant blow to MEXC’s credibility within the cryptocurrency community.

Central to White Whale’s concerns was MEXC’s approach to proof of reserves—a critical transparency mechanism that demonstrates an exchange actually holds the assets it claims to custody for users. According to White Whale, he specifically advised MEXC that simply publishing wallet addresses was insufficient as proof of reserves and that the exchange needed to do more to ensure genuine transparency with user funds.

MEXC reportedly shrugged off this advice, suggesting that their current approach was ‘better than nothing.’ White Whale countered that their proof of reserves was essentially ‘nothing,’ comparing it to the saying, ‘If you have to tell people you’re a lady, you aren’t.’ The exchange continues to push what White Whale describes as a ‘fake proof-of-reserves narrative,’ raising serious questions about whether user assets are properly backed.

Perhaps the most alarming revelation concerns MEXC’s approach to confiscating user funds. White Whale stated that he explicitly advised the exchange to stop confiscating users’ funds and instead report any suspected illegal activity to law enforcement. However, he claims the practice not only continues but is getting worse.

The exchange allegedly uses its ‘Risk Control Guidelines’ as justification for fund seizures while operating on the basis of mere suspicion. White Whale emphasized that MEXC still uses terms like ‘suspected,’ meaning it can permanently confiscate funds based on suspicion alone without due process. He further claimed that the exchange could easily prevent the major items on its risk list through code implementation, but doing so would remove their excuse to seize user funds.

In what appears to be a deliberate strategy to prevent users from challenging confiscations, MEXC has implemented a practice of wiping users’ transaction histories after seizing their funds. This development came after White Whale made his own account history public to prove his innocence following the $3 million confiscation from his account.

By systematically erasing transaction records, MEXC makes it virtually impossible for users to gather evidence to contest fund seizures. This creates a profoundly unequal power dynamic where the exchange can act on suspicion while denying users the basic documentation needed to defend themselves. The practice represents what White Whale describes as the culmination of the ‘structural rot’ within MEXC’s operations.

The revelations about MEXC come at a critical time for cryptocurrency exchanges worldwide, as regulators and users increasingly demand greater transparency and accountability. The issues raised by White Whale—inadequate proof of reserves, arbitrary fund seizures, and obstruction of user defense—strike at the heart of what makes exchanges trustworthy custodians of customer assets.

White Whale’s characterization of MEXC as a ‘rotten apple’ that will remain so as long as this structural rot exists serves as a warning to both users and the broader cryptocurrency industry. The case highlights how easily exchanges can undermine the very protections that make them viable financial intermediaries, potentially setting back efforts to build mainstream trust in cryptocurrency markets.