The cryptocurrency exchange XeggeX announced on its official website early this morning (June 27) that it is officially closing and applying for bankruptcy due to the "February hacker attack and subsequent issues." This news comes just four months after the February hacking incident, but problems such as user asset freezes and withdrawal channel closures have been ongoing, ultimately breaking the platform's capital chain.
Key Timeline:
February 2025: Hackers accessed the Telegram account of XeggeX's CEO, spreading panic information through the community. Subsequently, the platform's system was breached, preventing users from logging into their accounts, and some wallets showed a zero balance;
February - June: XeggeX continued to restrict withdrawals under the guise of "system maintenance," repeatedly promising that "restoration is imminent," but failed to deliver;
June 27: The official announcement of bankruptcy was made, with legal contact information and liquidation plans to be announced later.
User Profile: XeggeX was established in 2021, focusing on PoW mining coins (such as KAS, DNX) and niche token trading, primarily attracting "mining circle enthusiasts" and small project speculators. Its low entry threshold for deposits and rapid listing strategy once attracted a large number of Chinese-speaking users.
1. Technical Vulnerabilities and Lack of Risk Control
XeggeX's security risks had long been evident:
CEO Account Hacked: Hackers gained access through social engineering attacks, exposing the platform's weak internal communication mechanisms;
Data Breach: User information, databases, and backend systems were compromised, with some key data suspected to be lost;
Chaotic Management of Hot and Cold Wallets: Users reported that withdrawals required multiple manual reviews, leading to long-term liquidity issues.
2. Capital Chain "Death Spiral"
User Run on the Bank Pressure: Following the February incident, there was a surge in panic withdrawal demands, but the platform only allowed deposits and restricted withdrawals, exacerbating the collapse of trust;
Revenue Dwindling: Trading fee income dropped to zero due to business stagnation, while maintenance costs (such as servers and compliance audits) continued to deplete reserves;
No Hope for Financing: Niche exchanges lack institutional backing, making it difficult to secure financing through equity or bonds.
Data Comparison:
Debt Ratio: Although financial reports have not been made public, industry estimates suggest its debt ratio exceeds 90%, far surpassing the insolvency standards set by regulations;
User Losses: According to community statistics, approximately 12,000 users are unable to withdraw their assets, involving amounts that may exceed $80 million.
1. Increased Difficulty in Rights Protection
Complex Legal Procedures: Cross-border bankruptcy liquidation involves multiple national jurisdictions, making it costly for individual users to pursue claims;
Asset Priority Disputes: According to bankruptcy law, user funds may be classified as "general claims," with repayment priority lower than secured claims and operational debts;
Lack of Transparency: XeggeX has not disclosed wallet address audits, making it difficult for users to track the flow of assets.
2. Survival Rules for Small Exchanges Fail
The XeggeX incident reflects the common risks faced by mining coin exchanges:
Regulatory Vacuum: Lack of licenses (such as MiCA) and failure to regularly publish reserve proofs, relying on the gray market for survival;
Speculative Drive: Over-reliance on soaring PoW tokens to attract traffic, leading to liquidity crises once the market cools down;
Substitute Trap: Competitors like SafeTrade and Txbit have closed due to similar issues, yet users continue to flock to "bet on high returns."
1. User Self-Rescue Guide
Cold Wallets Reign Supreme: Transfer long-term assets to self-custody wallets (such as Ledger, Trezor), keeping only small amounts for trading;
Diversify Risks: Avoid concentrating all assets in a single exchange, especially beware of "high-yield niche coin" traps;
Dynamic Monitoring: Regularly verify the transparency of exchange reserves and pay attention to unusual large on-chain transfers.
2. Regulatory and Industry Response
Accelerate License Review: Under the EU MiCA framework, the Central Bank of Ireland has issued licenses to compliant platforms like Kraken, eliminating subpar exchanges;
Upgrade Technical Infrastructure: Institutions like Coinbase are promoting the standardization of on-chain reserve proofs to reduce user verification costs;
Investor Education: The U.S. SEC requires exchanges to clearly communicate risk warnings, while Hong Kong and Singapore are incorporating crypto assets into investor examination categories.
The bankruptcy of XeggeX is not only a "sudden death" for niche exchanges but also a reflection of the wild growth era of the cryptocurrency market. When the speculative bubble bursts, only technological compliance, asset transparency, and user rights protection can support the industry towards the next round of prosperity.
Related: The number of users of crypto AI applications has nearly doubled this year, with funding exceeding the total for 2024.
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