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OKEx Founder Star Xu Arrested After Crypto Exchange Suspends Withdrawals

According to Caixin news, OKEx founder Mingxing ‘Star’ Xu has allegedly been arrested by police following the major crypto exchanges sudden suspension of its withdrawals as one of its private key holders was said to have been cooperating with a public security firm in regard to an ongoing “investigation.”

The news of leading Asian cryptocurrency exchange OKEx suddenly suspending its services to cooperate with an investigation drove the crypto markets into a panic—and it has now been reported that the person cooperating with authorities was the founder of the exchange Star Xu.

The suspension of services immediately stirred a reaction in the Bitcoin price which plunged 3% while OKB took a 15% hit.

The exchange reported at the time of the service suspension, that it had been unable a private key-holder in question and claimed to be unable to complete the associated authorization requests. The private key holder in question was Mingxing Xu, who has now been taken into police custody.

Two other sources close to OKEx told Caixin News, that they confirmed the key holder under investigation was Star Xu, OKEx’s founder, who was “cooperating with the investigation by the public security authorities” per the exchange announcement.

One of the sources also reported that Xu had been taken for questioning by authorities last week and did not appear at work for several days. The source described Xu as being very detail-oriented in financial expenditure management and it seems obvious to them that the delays were due to his inability to authorize the withdrawals as one of the main private key holders.

OKG Holdings Says OKEx Founder Investigation Won't Impact Business, OKB Price Plunges Further

As OKEx founder Mingxing ‘Star’ Xu remains under investigation following the suspension of the exchange’s withdrawal service, OKG Technology Holdings Limited has told its shareholders that business operations won’t be affected—even though Xu is a controlling shareholder of the publicly listed company. Despite Xu being under investigation by Chinese authorities and a controlling shareholder in OKG Holdings (Stock Code: 1499), the company announced that they expect the investigation into the OKEx founder to have little effect on its business operations or that of its subsidiaries.

OKEx Suspension and Founder Investigation

Last week, leading Asian cryptocurrency exchange OKEx caused panic in the crypto markets after suddenly suspending its withdrawals to cooperate with an investigation.

The suspension of services immediately stirred a reaction in the Bitcoin (BTC) price which plunged 3% while OKB took a 15% hit on the day.

According to the first announcement by the major crypto exchange on Oct. 16, OKEx had suspended all cryptocurrency withdrawals as one of its private key holders was cooperating with a public security firm in regard to an ongoing “investigation.”

Soon after on the same day, it was reported by Caixin news, that the private key holder under investigation was OKEx founder Mingxing ‘Star’ Xu.

Xu had allegedly been taken into custody by police following the major crypto exchanges sudden suspension of its withdrawals as one of its private key holders was said to have been cooperating with a public security firm in regard to an ongoing “investigation”, according to two other sources close to OKEx.

According to the OKG Holdings announcement on Oct.18, the board of directors of the company was notified by the legal counsel acting for OKC Holdings Corporation on 16 October 2020 that Mr. Xu Mingxing is presently under an investigation by public security authority in the People’s Republic of China (PRC). OKG Technology has not yet been able to contact Mr. Xu to confirm the information.

Per the announcement:

“Mr. Xu is a non-executive Director of the Company and also the controlling shareholder of the Company (OKG) through his interests in OKC. As of the date of this announcement, OKC holds 3,904,925,001 shares of the Company, representing 72.60% of the total issued share capital of the Company.”

The OKG technology said that to the best of their knowledge the board is not subject to any ongoing government investigation in the PRC. The announcement also highlighted that they expect that the investigation with Mr. Xu will not have any material effect on the business operations or financial position of the OKG and its subsidiaries.

BTC Price Recover, OKB continues Plunge

As reported, following the suspension of services on Oct.16 at OKEx, the BTC price fell around 3%, but has now recovered from the scare and is currently valued at $11,467.35 at the time of writing. The OKEx token (OKB) however has continued to fall. Prior to the OKEx suspension of withdrawals, the OKB price was around $5.88, it then plunged 35% before making a slight recovery. At the time of writing OKB, token price sits at $4.71 around 20% lower than Oct. 16.

OKEx Founder Troubles Not Linked to Yuan Money Laundering in China, Says Blockchain Journalist

Colin Wu, a Chinese blockchain journalist, has recently posted a tweet reporting that the legal troubles facing Mingxing “Star” Xu, the founder of OKEx cryptocurrency exchange, most likely have nothing to do with allegations associated with the CNY money laundering activities.

Colin Wu is a Chinese journalist who frequently covers issues associated with cryptocurrency exchanges, blockchain and digital currencies, and their regulations in China.

After the OKEx founder was arrested, the Twitter community and even the media assumed that the ongoing investigations of Xu are associated with the involvement of money laundering activities in China. Media sources reported that OKEx crypto exchange might have violated anti-money laundering regulations with over 800 accounts and huge amounts of funds involved in the case.

However, Wu’s tweet on Oct. 21, indicated that he believes the sudden suspension of services last week on the OKEx exchange and the investigation into founder Star Xu have nothing to do with the Yuan money laundering on going in China. Wu suggested that the real issues are likely to be personal matters between the Chinese authorities and Mingxing Xu, the OKEx founder.

Wu wrote in the twitter post:

“OKEx announced the opening of CNY deposits and withdrawals, and the direct withdrawal of crypto is still not open. This may indicate that the OKEx platform has nothing to do with CNY money laundering. It is more of a personal problem with the founder of OK, Star Xu.”

On October 21, OKEx announced that it would resume P2P trading with Vietnamese dong, Indian rupee, and Chinese yuan fiat pairs. The crypto company said that for the time being, the buy option would only be available while the suspension of cryptocurrency withdrawals and sales still remains until further notice. The company’s blog said: “Please note that cryptocurrency withdrawals are still temporarily suspended and the “Sell Crypto” option is not available.”

In June this year, China’s Central Bank announced widespread investigations of money laundering activities from non-bank financial institutions and those identified to have violated expected regulations would be held accountable.

OKEx Suspended Withdrawals

OKEx suspended cryptocurrency withdrawals on October 16 after the exchange announced to its customers that the company was unable to contact the private key holders in China. Information later emerged that such as an individual was the crypto exchange’s founder, Mingxing Xu, who by then had been arrested and was cooperating with the police for ongoing investigations. Caixin Chinese media company disclosed that Xu was interrogated for at least a week ago and had been absent at work some time. But the surprising thing is that he is the only person who holds the keys of the entire offer crypto exchange.

However, Jay Hao, the CEO and co-founder of the crypto exchange, stated that the issues facing Xu were to do with his own personal matters, which would not adversely affect the company’s business.

After OKEx announced the news regarding the suspension of cryptocurrency withdrawals, Bitcoin price fell by nearly 3% and OKEx’s native token (OKB) declined by 15% within half an hour. However, Jay Hao assured customers that all their funds are safe.

OKEx Crypto Exchange to Resume “Unrestricted Withdrawals,” Causing OKB Token Price to Rise More

Cryptocurrency exchange OKEx has announced that it will resume what it describes as an “unrestricted withdrawal,” following a temporary suspension of digital asset withdrawals on the platform.

Per an earlier report from Blockchain.news, the suspension of withdrawals by the exchange was prompted when the crypto platform was obliged to cooperate with an ongoing police investigation.

Per the report, OKEx suspended all cryptocurrency withdrawals upon the news that one of its private key holders was cooperating with a public security firm in regard to an ongoing “investigation.” In light of the recent announcement, OKEx said that its platform has been confirmed not to have been involved in any wrongdoing or illegal activities and that the private key holder has now returned to his normal business functions. Per the official announcement on the exchange:

“Because OKEx has insisted on maintaining 100% reserves since its establishment, 100% of user funds can be withdrawn without any restrictions after withdrawals are reopened.”

The resumption of the withdrawals will begin no later than November 27, 2020, or even before, and the exchange noted that its experts will “conduct strict security checks to resume normal operations of the hot wallet system and to ensure the safety” of its users’ funds. In addition, OKEx said it will be launching a loyalty reward campaign to show gratitude to its community members for the inconveniences caused by the previous suspension of its withdrawal services.

OKEx Native Token OKB’s Price Rises Even More

Earlier today, news broke out that OKEx founder Mingxing “Star” Xu, who was arrested after the exchange suspended its withdrawals, will soon regain his freedom. Following that revelation, the exchange’s native token OKB surged by about 10%.

The coin has seen its price plummet after the suspension of crypto withdrawals, but with the news of Xu’s release and the resumption of withdrawals and business as usual for the exchange, the coin has surged upwards. It now trades bullishly, up 11.8% in the past 24 hours according to Coingecko.

While the coin’s performance on the market is influenced by events surrounding the OKB coin, better days are expected of the cryptocurrency, as traders look forward to it maintaining the 109.5% growth it has recorded in the past year.

OKX Founder Star Xu Advocates for Compliance Controls while questioning UniSat Wallet

Star Xu, the founder of OKX, emphasized the importance of compliance controls in the crypto industry. Xu’s comments come amid a growing focus on regulatory compliance within the sector.

On July 17, 2023, Xu tweeted, “At the current industry environment, all centralized swaps, exchanges, bridges without fully compliance controls including KYC, AML, and others will be high risk in every jurisdiction. Multicoin is the latest example. Protect your crypto yourself.” This statement underscores the potential risks associated with platforms that lack robust compliance measures.

Editor’s Note: It’s believed that Xu intended to reference ‘Multichain’ rather than ‘Multicoin’ in his tweet.

On July 14, 2023, Multichain announced the cessation of its operations due to the detention of its CEO Zhaojun and his sister by Chinese authorities. The team has lost contact with Zhaojun since May 21, and his sister, who was managing day-to-day operations and preserving user assets, was recently taken into custody. The future of the preserved assets is now uncertain. This follows a recent exploit where an attacker drained $130 million from various token bridges.

In a follow-up tweet, Xu revealed that the OKX Centralized Exchange (CEX) team has been proactive in establishing a global standard compliance infrastructure. “OKX CEX team start to build our compliance infrastructure at the global standard before, keep to build,” he wrote. This indicates OKX’s commitment to adhering to regulatory standards and providing a secure platform for its users.

In another tweet, Xu questioned the nature of UniSat Wallet’s newly announced brc20-swap. UniSat Wallet had earlier announced the launch of “brc20-swap, the first-ever Ordinals native swap, floating on top of bitcoin mainnet, utilizing brc20 protocol as its underlying asset infrastructure.” Xu responded to this announcement with a tweet asking, “Is it a centralized swap?” This query suggests Xu’s ongoing concern about the compliance measures of new Oridinals wallet.