LBank under pressure from wave of complaints about frozen user funds
LBank users have reported complaints about frozen funds even after successful trading. High-profile crypto influencers and traders have faced similar issues, with LBank reportedly refusing withdrawals due to obscure trading rule violations. Crypto investigator ZachXBT linked LBank to MEXC, another exchange with similar complaints, leading to allegations of liquidity issues and risky business practices targeting profitable traders. Some users experienced freezes following specific crypto events, and others cited incomplete KYC or location rule violations. The issue highlights risks linked to centralized exchanges, as similar complaints against MEXC and Ourbit have surfaced. User backlash has pushed exchanges like MEXC to reconsider freeze policies, but challenges with unresponsive customer service and opaque regulations persist.
Complaints About LBank's Frozen Funds
LBank users have issued complaints about having their funds frozen. Even after successful trading, some users could not access their gains, as the exchange reportedly refused to release the funds. Several high-profile crypto influencers have raised concerns about LBank locking up their gains. Reports claim that even after successful trading, the centralized exchange refused to honor users’ withdrawal requests.
LBank's Connections to Other Controversial Exchanges
Crypto investigator ZachXBT pointed out that a large shareholder of LBank is also behind the exchange MEXC, which has faced similar complaints. MEXC was previously involved in a months-long battle with a trader known as The White Whale. ZachXBT alleged that these centralized 'bucket shop' exchanges targeted profitable traders, freezing their accounts as part of a business strategy.
Profitable Meme Token Trades and Account Freezing
LBank became popular for offering some of the hottest meme tokens, which allowed traders to make quick gains. However, even prominent influencers were unable to withdraw their earnings. One trader, Param, shared his experience with a tweet, stating:
'LBANK FROZEN MY FUNDS in 6 figures. Please help everyone with this post so I can get justice.'
Param was unable to withdraw gains from PNUT, a token that achieved record trading performance in 2024. His case highlights the frustrations of many traders. LBank justified these freezes by citing account violations of trading rules.
Opaque Practices in Smaller Centralized Exchanges
The issue may not be exclusive to LBank, as similar complaints have been raised against smaller centralized exchanges. These exchanges, often operating under opaque licenses, flagged highly successful traders' accounts for breaking vague trading rules. Traders were pressured to provide evidence defending their profits, which were often due to meme token rallies and gains of up to 10X. In some cases, frozen funds were linked to stricter rules around KYC compliance or travel and location restrictions, affecting around 40% of reported cases.
LBank's Broader Impact on Meme Token Trends
Despite the controversies, LBank plays a significant role in the meme token sector and other crypto launches. However, the exchange's arbitrary restrictions have caused significant disruptions. These restrictive policies were reportedly triggered by events such as the recent xUSD de-pegging. Speculations arose that LBank might be facing liquidity issues or struggling to manage user funds effectively. Customer service complaints further fueled concerns, with traders alleging unresponsiveness and deliberate attempts to avoid resolving problems.
Broader Risks of Centralized Exchanges
LBank is not the only exchange under scrutiny. Other centralized exchanges, including Ourbit and MEXC, have also faced backlash for freezing accounts and withholding user funds. For example, MEXC eventually reconsidered its freeze policies after mounting pressure from users. Notably, trader The White Whale successfully recovered his funds from MEXC on October 31, highlighting how user advocacy can result in policy revisions. These issues emphasize the inherent risks associated with centralized exchanges.