OKEx pauses withdrawals for crypto currencies

OKEx, one of the largest crypto exchanges in the industry, has stopped all crypto currency withdrawals for the time being. The reason lies in the founder Star Xu’s current cooperation with a public security authority. There has been a slight market reaction to the news.

On Friday, the Bitcoin exchange OKEx announced that for now, no more withdrawals are possible via the exchange. The reason for this was that at the moment, there is no possible contact with the founder Star Xu (one of the key holders). He is currently cooperating with a public security authority. Without the contact with Xu, no transactions can be authorized.

The Malta-based exchange OKEx is a heavyweight in the Bitcoin exchange landscape and, together with Huobi and Binance, is one of the three largest crypto trading centers in the world.

No transactions without the key holder

In a public letter, the exchange assured the public that the assets of the customers are not affected:

“In order to act in the best interests of our customers and to provide exceptional long-term customer service, we have decided to suspend withdrawals of digital assets/crypto currencies. We assure that the other functions of OKEx will remain normal and stable, and the security of your assets at OKEx will not be compromised.” – Letter OKEx Support

Likewise, OKEx apologizes for any inconvenience caused by the suspension of digital assets/crypto currency withdrawals.

According to media reports, OKEx founder Mingxing Xu (also known as Star Xu) was interrogated by police. However, this was not confirmed by OKEx. Local Chinese media reported that the private key holder is in fact Xu Mingxing, and that he was arrested at least a week ago and has not been seen since.

Impact on the Bitcoin price

Bitcoin (BTC) has dropped by just under 3% in response to the message, while the OKEx token OKB suffered a drop of -15%. Hours before the announcement Whale Alert, a large transaction monitoring service, discovered several large transfers between OKEx and unknown wallets.

Outgoing transfers of 1,180 BTC worth $13.6 million, 50 million Tron (TRX) worth $1.3 million and 21,000 Ether (ETH) were made within six hours, in parallel with an incoming transaction of approximately $13.9 million in Tether (USDT). Given the large number of transactions that occur each day, this may be a coincidence.

Not the first case

Following the collapse of Cryptopia and the QuadrigaCX exchange in 2019, due to errors in the management of the exchange’s private keys, the situation at OKEx is a further reminder of the dangers of trading on centralized exchanges. This could lead to more users switching to decentralized alternatives where digital assets are traded without custody.

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