OKEx is the latest Centralized-Exchange (CEX) to become a topic of controversy in the crypto space. In this article, we’ll take a look at the ramifications of an incident like this and what this could potentially mean for the entire blockchain industry.
With only a few weeks having gone by since the controversy at Bitmex, this unfortunate news could potentially spell disaster for the future of the CEXs.
OKEx freezes withdrawals indefinitely on Friday, October 16
It was this past Friday when one of the most well-known exchanges, OKEx, suspended withdrawals – followed by an announcement stating that one of the holders of the clients’ private keys was “cooperating with a public security bureau” in regards to an ongoing investigation.
Representatives of the exchange went on to state they had not been in touch with the aforementioned keyholder, which had ultimately prevented the administration behind OKEx to complete any withdrawals at the time.
According to a statement issued publicly by the company, withdrawals would resume “immediately” once the keyholder was “able to authorize” transactions.
OKEx founder, Mingxing Xu, reportedly under investigation
The news came after OKEx issued their first statement, reporting that their CEO and founder, Mingxing Xu (also known as “Star Xu”), was allegedly being held and questioned by Chinese authorities.
According to further statements issued by the exchange, Xu was detained by authorities at least one week before withdrawals were halted and had not been present at the OKEx company headquarters in some time.
However, this is inconsistent with the team’s initial statement behind why they were unable to process withdrawals. Xu allegedly possessed the private keys necessary for completing withdrawals yet was ‘missing’ for an entire week before the exchange publicly took action.
What does this mean for the blockchain industry?
While this may only be a temporary hold on user funds, incidents like these do nothing to boost public sentiment and confidence in cryptocurrency CEXs.
OKEx is sadly another reminder of why the blockchain industry needs to be decentralized. Whether this could spell the end for what is one of China’s three largest cryptocurrency exchanges remains to be seen.
How can you protect yourself?
When entering the cryptocurrency markets, it is vital to understand you are exposing yourself to high-risk and the most volatile (and profitable) assets on the planet. Therefore, it would be prudent to only invest what you are comfortable with losing. You should expect and be OK with the worst-case scenarios, should anything happen.
With all the recent controversy surrounding CEXs, it’s worth repeating the cautionary disclaimer: NOT YOUR KEYS, NOT YOUR CRYPTO!
Not only does this apply when using a CEX, but it also applies to digital assets used for lending on Decentralized-Finance (De-Fi) platforms, such as Compound (COMP).
Be sure to check out swapfol.io for more guides and articles to help you navigate the exciting world of crypto, and remember to join our growing community on Telegram and social media!
We have many supporters and team members who are willing to help troubleshoot and resolve any problems you might encounter! You could even earn free Swapfolio (SWFL) tokens – just for sharing your thoughts, ideas, and enthusiasm!
It’s also just a fun place to hang out and chat with some cool people. We hope to see you there!