OKEx founder taken into police custody

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OKEx’s founder, Xu Mingxing, also known as ‘Star’ Xu, has been taken into police custody; this is the latest development in regard to OKEx suspending withdrawals on their platform. Xu was a private key holder at OKEx and the exchange’s authorizations cannot be completed without him.

“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,” said OKEx in their official announcement.  “As such, the associated authorization could not be completed.”

Why is Xu in custody?

According to Beijing-based news outlet BlockBeats, Xu was taken into custody concerning personal matters he was involved in, not for any matters related to the OKEx exchange. 

The personal action is

when he purchased the listed company personally, he might move some money to HK through illegal private bank, one of which had something wrong

This is why Star Xu stayed in Police station now, nothing wrong with cryptocurrency, and OKEx, just Star Xu. https://t.co/AvCGTUy7rR

— BlockBeats｜We're hiring! (@BlockBeatsAsia) October 16, 2020

Xu allegedly moved money out of the country through an illegal private bank, and therefore, might be affiliated with a money-laundering investigation. 

Regardless, the OKEx exchange suspended digital asset withdrawals beginning on October 16, 2020, at 11:00 (Hong Kong Time) because they believed it would be in the best interest of their customers.

A chain reaction in the market

OKEx is one of the largest digital currency exchanges in the world and is the go-to exchange for many individuals who live in the Asia Pacific region. 

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

According to Glassnode, roughly $2.3 billion is trapped in the OKEx exchange due to the withdrawal suspension. But beyond money being trapped, this news had a negative impact on the digital currency industry at large. Shortly after the news broke that Xu was in custody, the price of Bitcoin (BSV) dropped by roughly 7%, falling from $169.77 to $152.34. Unfortunately, when a major exchange suspends service or halts one of its features, especially a crucial feature like withdrawing money, observers and market participants are going to think there is trouble at the company and on the horizon.

Although it is rumored that Xu’s activities are not related to the OKEx exchange, we will be keeping an eye on this developing story and will continually update our audience as more information comes out.