OKEx, a top 20 crypto exchange, is under investigation by Chinese authorities according to a report. OKEx provides both spot and crypto derivatives trading. It has been widely reported that the price of Bitcoin tanked as word leaked out and OKEx suspended all withdrawals. The waters have been muddied further as OKEx had announced the suspension with little additional information.
We sincerely apologize for any inconvenience. Further announcements will be made. pic.twitter.com/t14l7z0EUL
— OKEx (@OKEx) October 16, 2020
These are not #OKEx addresses; @whale_alert and other third parties have mislabeled these addresses. Please only rely on official OKEx channels for up to date information. https://t.co/VgULVjkWPK pic.twitter.com/J5W6cu0svu
— Jay_OKEX_CEO (@JayHao8) October 16, 2020
A report in Bloomberg claimed that Chinese authorities were the cause of the suspension. To quote the report:
“An unidentified staffer responsible for users’ private keys — accounts where crypto assets are stored — has been “out of touch” while cooperating with a police investigation, the Malta-based exchange said in a statement Friday. As a result, the company has halted all cryptocurrency withdrawals, without saying when they will resume. OKEx founder Star Xu was the staffer taken away, Caixin reported, citing two unidentified sources at the firm.”
The publication referenced a post by OKEx:
“One of our private key holders is currently cooperating with a public security bureau in investigations where required. We have been out of touch with the concerned private key holder. As such, the associated authorization could not be completed. Pursuant to 8.1 Service Change and Interruption of the Terms of Service, OKEx may change the Service and/or may also interrupt, suspend or terminate the service at any time with or without prior notice. In order to act in the best interests of customers and deliver exceptional longtime customer service, we have decided to suspend digital assets/cryptocurrencies withdrawals as of [October 16, 2020 at 11:00 (Hong Kong Time)]. We assure that OKEx’s other functions remain normal and stable and the security of your assets at OKEx will not affected.”
The FT confirmed that OKEx was “co-operating in the inquiry launched by a public security bureau in China,” but did not provide any additional insight into the matter.
OKEx was originally launched in China but has since migrated to crypto-friendly Malta. China has a mixed record on crypto that is not affiliated with state-based objectives having banned crypto trading some time ago while working on a digital yuan and other blockchain-based products. The mining of Bitcoin remains popular and tolerated in China.
While few facts regarding any investigation of the crypto exchange are available chatter regarding more government actions targeting these marketplaces has increased. Recently, in the US, BitMEX was the target of an CFTC enforcement action due to allegations of money laundering. The civil case was joined by a criminal action by the US government.