Bitcoin is trading at a 30% discount on OKEx amidst ongoing investigations by Chinese authorities, who have suspended withdrawals on the exchange after taking the owner into custody.
In Brief
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Crypto withdrawals on the Chinese exchange have been suspended for two weeks.
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Chinese police ordered the suspension of withdrawals after the owner, Xu MingXing was taken into custody.
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Bitcoin and USDT are trading at a 30% discount on the exchange as customers lose trust in the platform.
Live updates on the situation from OKEx read: “funds remain safe and unaffected” despite nearly two weeks of suspended trading. The owner of the crypto exchange Xu MingXing is currently in custody of Chinese police, which is not a good sign by any measure.
OKEx Exchange Owner Under Police Investigation
As covered by crypto-briefing, Chinese authorities took Xu MingXing on October 16th, and since then withdrawals have been suspended.
Though Xu’s apprehension is allegedly unrelated to the exchange, the Chinese police have forced suspension of withdrawals to investigate the matter. The most likely outcome is that the owner will be formally arrested and the above claims are immaterial so long as users cannot withdraw funds.
This would imply further delays in the resumption of withdrawals, which could span months.
As you can imagine, long delays in withdrawals are not a good sign. In prior instances in the past like the QuadrigaCX ponzi scheme, similar delays preceded the main event.Additionally, the current OKEx situation has another similarity with QuadrigaCX. Like Quadriga’s CEO, Gerald Cotton, Xu MingXing is the sole owner of the exchange’s private key. This means that user funds are beholden to one person, which is to say that funds are by no means ‘safe’.
The Bitcoin balance on the exchange alone is above 205,000 BTC, worth $2.7 billion. The figure accounts for 1.1% of the entire bitcoin circulating supply. OKEx is the largest futures platform with an unsettled volume of futures contracts worth $1.02 billion.
Presently, the only option for exchange users is to sell their crypto via the exchange’s P2P platform for CNY, INR, or VND.
As the delay is protracted, users are leaving the exchange en masse. in fact, bitcoin and USDT are selling at a discount on OKEx at the equivalent of $10,000 and $0.75, respectively.
The OKEx mining pool hashrate dropped significantly around the same time as its withdrawal suspension.
In the unlikely event that the exchange owner is fine and things will resume as normal, the platform will have lost its credibility in the process.
Thankfully, there are many reputable exchanges in the cryptoverse.
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