OKEx Suspends Withdrawals Following Founder’s Arrest, OKB Shreds 15%

News / 16.10.2020

Major cryptocurrency exchange OKEx announced today that it halted all withdrawal services. This is coming after the exchange lost touch with the Founder Star Xu, one of the exchange’s private key managers.

Xu was reportedly taken away by the police and is cooperating with the authorities in an investigation. Following the event, the company said it couldn’t communicate with him, hence the suspension.

“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,” OKEx explained

The service was suspended because the exchange could not get the needed authorization from the founder as a private key holder due to the communication issue. 

Money Laundering Investigation

Sources familiar with the matter told local media Caixin that Xu was taken away by the police more than a week ago and has not returned to the company for many days. 

The reason why the OKEx boss was taken into custody is still not clear. All we know is that he is “cooperating” with the authorities in an investigation. However, it may be related to money laundering, according to Chinese reporter  Colin Wu.

Crypto Market Crashes

The sudden suspension of withdrawal services met with panic from crypto traders considering that OKEx is one of the most popular exchanges. Many feared if another KuCoin case is about to happen. The negative reaction caused the prices to plummet across boards. 

Bitcoin dropped from above $11,500 to $11,200, and most altcoins followed suit. However, the market has started to recover from the flash crash as the Malta-based exchange clarified that funds are SAFU. 

Meanwhile, OKB, the native cryptocurrency of OKEx, suffered a significant loss after the announcement. The token tanked more than 15%, falling from over $5.8 to $4.8. OKB is recovering and trading at $5.15 at press time.

Source: Tradingview

According to OKEx, withdrawal services will resume once the private key holder can provide the needed authorization.

“We have been out of touch with the concerned private key holder. As such, the associated authorization could not be completed,” the exchange said. 

Mandy Williams joined the crypto space in 2016, and since then she has been learning and writing about cryptocurrencies and blockchain technology.