Fly to Malaysia for KYC? MEXC Responds to the White Whale’s $3 Million Allegations

For days, the crypto community has been gripped by the saga of “The White Whale,” a trader who accused centralized exchange MEXC of freezing over $3 million in his account. In a viral thread, he alleged his only offense was being “too profitable”.

He claimed the exchange lured him into a dangerous in-person KYC demand and framed the ordeal as part of a wider industry pattern where traders are “punished for winning.” Now, in an exclusive with BeInCrypto, MEXC has addressed the allegations directly. The exchange rejects claims of retaliation, explaining the rationale for account restrictions, and outlining how its risk controls operate.

The White Whale’s Claims: “Punished for Winning”

On August 24, The White Whale publicly revealed that the MEXC exchange had frozen $3,158,572.32 of his funds since July. He insisted that no Terms of Service violation was cited and that no evidence of wrongdoing was presented.

“My only conceivable offense? I was too profitable…I consistently beat their external market makers… When the counterparty they need in order to stay in business consistently loses, whose side do you think they will pick?” he wrote.

The trader further shared screenshots of email and Telegram correspondence. He said MEXC initially invited him to meet with its “leadership team.” Instead, they reportedly connected him with a single executive who demanded he travel to Malaysia for “in-person KYC.”

“I’ve already done every form of KYC they’ve ever asked for — live video, address verification, multiple layers. Their Terms of Service contain zero mention of in-person KYC. This is not compliance. This is coercion,” he added.

The claims, coupled with a $2 million bounty he offered for industry help, set off a storm of speculation about centralized exchange practices.

MEXC’s Response: “Profitability Is Not Grounds for Restrictions”

MEXC, in comments shared exclusively with BeInCrypto, firmly rejected the notion that trading success or profitability can trigger account freezes.

“At MEXC, account restrictions are never imposed based on trading profitability. Our risk control measures were designed solely to help protect the integrity of trading on our platform, user assets, and satisfy compliance obligations,” the exchange said.

MEXC said the White Whale’s account was restricted because “activities associated with the account triggered our risk control systems.” Reportedly, these controls monitor for indicators of market manipulation, spoofing, wash trading, suspicious activity, or illicit fund flows.

“These measures are not taken lightly or meant to intentionally restrict access to user funds,” MEXC added.

The exchange articulated that most users who undergo further verification successfully regain full access.

On the In-Person KYC Controversy

Perhaps the most explosive claim came from The White Whale’s screenshots, which showed a demand to fly to Malaysia for face-to-face verification.

While the exchange did not directly address why an in-person request surfaced despite no such clause in its Terms of Service, it maintained that compliance measures are grounded in global AML and CFT obligations.

“Our priority is to ensure that all procedures, including KYC and risk control compliance review, are transparent, standardized, and aligned with global regulations. Clear and transparent policies govern all user procedures, and any official communication from MEXC will always align with these standards,” the exchange told BeInCrypto.

The White Whale argues his case is symptomatic of a larger issue: CEXs retaliate against highly profitable traders who expose their market-making weaknesses.

While claims suggest this may not be isolated to The White Whale, dozens of traders supposedly echo similar frustrations.

“Account reviews and restrictions decisions are never tied to trading profitability. They are usually triggered by our risk control systems that analyze unusual trading activity, suspicious fund flows, or compliance red flags,” MEXC articulated.

The firm pointed to its enforcement record, which includes handling over 124 freeze requests from law enforcement and intercepting 41 cases tied to theft or compliance enforcement in May and June alone.

In the exclusive statement, MEXC told BeInCrypto that the exchange’s false-positive rate for account flags is under 1%.

As centralized exchanges operate under increasing global scrutiny, MEXC added that it is investing in transparency.

“Transparency, fairness, and security remain our top priorities. While compliance measures can sometimes be inconvenient, they are essential to protecting our ecosystem and maintaining the trust of our global communities,” the exchange told BeInCrypto.

Against this backdrop, MEXC has begun publishing quarterly risk control reports detailing fraud prevention, enforcement cases, and security upgrades. These are designed to give users insight into how and why restrictions are applied.

A Test of Centralized Exchange Accountability

The White Whale and MEXC dispute highlights the power imbalance between traders and centralized exchanges. For the trader, the freeze proves that “users are treated as exit liquidity.” For MEXC, the case is an example of risk controls working as designed in a compliance-driven environment.

Either way, the saga has reignited debate about transparency, fairness, and user protections in the crypto industry.

This is especially true as billions of dollars in trading volume flow daily through exchanges whose internal controls remain opaque to the public.

“The question now is simple…How long will the industry turn a blind eye while exchanges resort to tactics that belong in crime thrillers, not capital markets?” The White Whale wrote.

However, MEXC claims a compliance-first stance, with ongoing transparency. For traders, the case may be a reminder of crypto’s oldest lesson: that when assets are locked on centralized exchanges, control ultimately lies elsewhere.

The White Whale did not immediately respond to BeInCrypto’s request for comment.