Founder of OKEx crypto exchange arrested on fraud charges

Founder of OKEx crypto exchange arrested on fraud charges

The founder of the world’s second largest cryptocurrency exchange, OKEx, and exchange services provider, OKCoin, has reportedly been detained police in Shanghai, China. Star Xu is allegedly involved in digital currency fraud, as reported by the Chinese local media outlet Sina News.

At the time of this writing, Xu was being held at the Shanghai Weifang Xincun police station. Sina News indicated that he could be released within 24 hours unless more evidence of his participation is uncovered.

The case is allegedly not tied to OKEx or OKCoin but, rather, to a cryptocurrency token, WFEE Coin. The company behind WFEE Coin has been accused of a number of fraudulent practices recently, resulting in the police action. Xu is a shareholder in WFEE.

Xu’s company reportedly issued and sold tokens through its website. Xu was targeted by police since, as a shareholder, he can be held accountable for any scams that are conducted by the company. However, Xu’s company is located in Shanghai and is not involved in the issuance of the tokens. As such, it is illogical that the company would attempt to defraud investors via a subsidiary in Beijing.

A statement by an anonymous source reads, “The WFEE team’s exact location seems to be in Shanghai. As such, it makes little sense for them to defraud investors through a Beijing subsidiary. The exact nature of Star Xu’s involvement remains unclear at this time. He is expected to be either released or remain in custody after the initial 24-hour period expires in a few hours.”

That was supported by another individual following the activity. Twitter user “cnLedger” posted, “Preliminary investigation by Shanghai police shows that Xu’s company in Shanghai is not related to digital currency. The alleged fraud was not conducted in Shanghai but in Beijing, therefore documents will be handed to Beijing police.”

The OKEx exchange has enjoyed impressive success recently. Its volumes surged over the summer, reaching as much as $5.7 billion in August. In July, it had reported a volume of half that amount. Despite the arrest, OKEx is still going strong and is maintaining its position, second only to the Binance exchange.

According to cnLedger, Xu was released from Shanghai police custody around 9:30 p.m. Tuesday.

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