- MEXC has frozen 1,500 accounts after detecting market manipulation in Vietnam and CIS countries.
- Manipulation tactics like spoofing and layering are shifting from retail traders to organized groups.
- South Korean regulators banned unregistered exchanges like MEXC and KuCoin from Google Play.
MEXC has frozen over 1,500 accounts after uncovering large-scale market manipulation. The exchange identified two coordinated groups operating in Vietnam and the Commonwealth of Independent States (CIS) countries. Some of these accounts showed daily trading volumes exceeding $20 million, which has raised concerns about potential market disruptions. MEXC reported that malicious trading activities increased by 60% between January and February compared to the end of last year.
The investigation showed that these groups used manipulative tactics like self trading, spoofing, layering, front running and quote stuffing. Such tactics include placing orders that are deceptive in order to create artificial market movements. According to MEXC, it appears that these manipulations are no longer carried out by retail traders but by organized groups having institutional tools and infrastructure.
In response to these issues, MEXC has taken corrective steps such as rolling back suspicious transactions and suspending the accounts involved in these bots. The exchange has also put in place a monitoring system to detect suspicious accounts. This system, once implemented, means that those who are flagged will be under enhanced surveillance for a minimum of 30 days. If these accounts continue the manipulative behavior, the exchange will block them on further detection, and refer them to further investigation.
Institutional-Level Manipulation Raises Concerns
The findings by MEXC state that market manipulation is shifting from single traders to organized groups that manipulate the market using complex trading strategies. These groups have access to institutional-grade liquidity and algorithmic trading tools normally only found in professional trading firms.
The transformation from retail level manipulation to quasi institutional strategies, they pointed out, poses systemic risks. Manipulative trading patterns can also affect market prices, liquidity and volatility. MEXC said that some of the involved accounts were algorithmic utilities to generate short term distortions in price and led to up to 120% volatility on some trading pairs.
The exchange will share its findings with the relevant authorities for further investigation. MEXC executives warned that without stricter oversight, similar schemes could continue to impact crypto markets.
Wider Crypto Security Issues & Regulatory Implications
The announcement by MEXC comes at a time when the overall cryptocurrency industry is experiencing more heightened security concerns. Blockchain investigator ZachXBT had pointed out vulnerabilities in the sector, citing the $1.5 billion Bybit hack as an example of security risks. He warned that without regulatory action, security breaches could become more common.
At the same time, reports have linked some decentralized finance (DeFi) protocols, such as eXch and THORChain, to transactions involving North Korea. These protocols reportedly generate most of their volume from such transactions. Nevertheless, they have not assumed responsibility for these activities and are causing concern in illicit financial flows in the industry.
Regulators in different countries are addressing the security issues. According to South Korean authorities, they have taken action against Poloniex, KuCoin, MEXC, Phemex and Bitrue in the country. These exchanges have been operating in the country without registration, and had their apps removed from Google Play. The development is part of a growing trend for governments to close the gap on unregistered exchanges by forcing tighter regulation and protecting investors.
These actions by MEXC underscore the growing need for more robust action to disrupt market manipulation and security holes. With regulatory pressure mounting, exchanges might have to step up monitoring to prevent such activities and keep up with changing regulations.
