OKEx suspends withdrawals; media report founder detained
The cryptocurrency exchange OKEx has suspended withdrawals. One of the private-key holders is not responding, and at the time of writing he is cooperating with law enforcement authorities.
Withdrawals of digital assets/cryptocurrencies @OKEx are currently suspended. Other functions are up and running. Your funds and assets are safe and not affected. Details: https://t.co/vMehdsZs1b
We sincerely apologise for any inconvenience. Further announcements will be made. pic.twitter.com/t14l7z0EUL
— OKEx (@OKEx) October 16, 2020
The rest of the platform’s functions remain online, and users’ digital assets are safe, according to OKEx representatives.
OKEx CEO Jay Hao stressed that the investigation concerns the private matters of the key-holder and is not connected with the exchange. Dovey Wan of Primitive Ventures clarified that this relates to Chinese authorities.
All operations @OKEx except digital asset/cryptocurrency withdrawals remain unaffected.
All your funds and assets are safe.
The investigation concerns a private key holder’s personal issue only. Further announcements will be made.
— Jay_OKEX_CEO (@JayHao8) October 16, 2020
Update: The authoritative Caixin reported that OKEx and OKCoin founder Star Xu (Star Xu/Mingxing Xu) was detained a week ago. In a literal translation, the outlet wrote that he was “taken away.” In September 2018 he was briefly arrested in connection with one of the investigations related to cryptocurrency fraud.
In a conversation with ForkLog, an OKEx spokesperson said that Star Xu is at the Beijing office.
“He is not a key holder and cannot verify transactions. The police asked him to give a comment on the situation with the key holder whom they have questions about. We expect that after Xu’s discussion with the police withdrawals will be restored.”
It remains unclear how exactly the conclusion of Xu’s talk with the police would restore withdrawals if Xu is not the private-key holder.
OKEx later emphasised that Xu does not participate in the company’s operational activities.
Update: According to Chinese media, two other top managers were detained along with Star Xu. As reported, they have been released on bail. The article claims that Xu’s detention is connected to the reverse listing of OK Group on the Hong Kong stock exchange (read more via the link), and not to OKEx’s activities. This information contradicts Caixin. It is not yet known whether the detained were executives at OKCoin or OKEx.
Update: After the suspension, an unknown Huobi user transferred 1,995 BTC to OKEx. Whale Alert logged transfers at 10:51 and 13:22 MSK.
Update: In the last 48 hours prior to the suspension, 10,000 BTC were moved out of OKEx. The outflow was recorded by Glassnode. However CryptoQuant contends that these are internal transfers.
Prior to the suspension of cryptocurrency withdrawals from #OKEx, we observed large BTC outflows from the exchange.
According to our data, a total of 10,000 BTC (~$113 million) were withdrawn in two large batches in the past 48h.#Bitcoin
Live chart: https://t.co/uMpGQIpIxN pic.twitter.com/I37lyKmcKI
— glassnode (@glassnode) October 16, 2020
Update: OKEx told CoinDesk that the investigation is not connected with the exchange or AML procedures. This refutes rumours that the situation relates to money laundering via the platform, which had earlier been spread by 8btc co-founder Red Li.
Update: At 17:28 MSK, Whale Alert logged withdrawals from OKEx to Binance in two transactions: 5,000 BTC and 3,500 BTC. The channel administrator suggested these may be internal transfers within OKEx.
ℹ️ We suspect these are internal exchange transfers. We are investigating the matter right now.
— Whale Alert (@whale_alert) October 16, 2020
OKEx denies that the addresses belong to them.
These are NOT okex address. https://t.co/wwpN8PmGEQ
— Lennix Lai (OKEx) (@LennixOkex) October 16, 2020
Update: At the end of the day, OKEx again stressed that funds are safe, but withdrawals have not been opened.
We’d like to officially clarify: Withdrawals from @OKEx are still temporarily suspended, but all other operations are running smoothly. User funds are safe. Please check back here for the latest updates.
Updated statement: https://t.co/t4bifbtEC0
— OKEx (@OKEx) October 16, 2020
Update: The community manager at OKEx, Anton Ananyev, told RBC-Crypto that ForkLog’s comment attributed to another employee of the exchange was “a fabrication.” We immediately provided colleagues with evidence that the comment was supplied to us by a real OKEx representative.
OKEx spokeswoman Vivienne Chow later said that neither Ananyev nor the person ForkLog spoke with were authorised to provide official comments.
We thank RBC-Crypto colleagues for promptly reacting to the defamatory statements by OKEx manager Anton Ananyev and updating their piece accordingly.
Hours before the statement from OKEx, substantial sums moved in BTC, TRON and ETH. According to Glassnode, around 200,000 BTC (1.1% of the circulating #bitcoin supply) are currently held in OKEx wallets.
According to our data, around 200,000 BTC (1.1% of the circulating #bitcoin supply) are currently held in #OKEx wallets.
That is around $2.3 billion worth of $BTC stored in the exchange’s vaults. https://t.co/xfOmlZyWbY pic.twitter.com/g2roJgFxNP
— glassnode (@glassnode) October 16, 2020
Red Li, co-founder of 8btc, said that rumours were circulating about money laundering through 800 accounts on an unnamed exchange, hinting at a possible reason for the event.
#okex first stated withdrawal will be suspended 15PM but quickly changed to 11AM. Rumor has it that over 800 accs in «certain» exchange are involved with cross-border money laundering. #btc #crypto pic.twitter.com/mc67ZRCj6O
— Red Li (@redtheminer) October 16, 2020
Users have already pointed to OKEx’s private-key safety practices, including backups held by different people in different locations. On Twitter there is talk that law enforcement ordered withdrawals to be halted.
so yeah… pic.twitter.com/vLZesmxYLg
— i.am.nomad (@IamNomad) October 16, 2020
goes with this https://t.co/zj5Zfsubyj
— i.am.nomad (@IamNomad) October 16, 2020
Bitcoin prices and the exchange’s OKB token fell immediately following the news.
Recall that the U.S. Department of Justice had previously charged the BitMEX founders with violations of the Bank Secrecy Act. They face up to five years in prison.
Separately, the U.S. Commodity Futures Trading Commission filed a suit against them and the parent company 100x Holdings Limited for violations of KYC/AML rules and for operating an unregistered trading venue.
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