OKEx Withdrawals Remain Suspended

November 13, 2020 02:34 PM
Crypto story of the day

Crypto story of the day




Bitcoin (BTC) is holding above USD 16,000 but remains off yesterday's highs. Litecoin (LTC) is the top performer, up over +10% for no obvious reason.

Crypto Story of the Day

Crypto exchange OKEx’s withdrawals remain suspended since October 16 when the venue announced it was unable to process them due to an unidentified staff member responsible for holding private keys being out of touch while cooperating with unspecified authorities.

The October 16 statement notified users that one of the exchange’s “private key holders is currently cooperating with a public security bureau in investigations where required.” The exchange’s CEO has maintained that the investigation isn’t connected to OKEx. Last week OKEx put out a statement notifying users that the individual in question has not been criminally charged but is cooperating with unspecified local authorities. That statement also informed users that OKEx had hired an external legal counsel to assist in the matter. 

OKEx has also regularly tweeted since the suspension was announced, informing users that the situation remains ongoing and assuring users that “100% of funds can be withdrawn after withdrawals are resumed on OKEx.” The exchange’s OKB coin has dropped from a market cap of USD 352 million to 287 million since the withdrawal suspension was announced. 

Following the announcement of the withdrawal suspension, we wrote that we found it hard to believe that the exchange had no backup plan regarding an inability to access private keys. We also suggested that the exchange may not have legal recourse to execute back-up plans if they believed the private key holder would be reachable shortly. However, given the amount of time that has passed since, we have to assign a higher likelihood to a scenario where OKEx has experienced a breakdown of processes associated with managing private keys. Furthermore, with the withdrawal suspension closing in on 4 full weeks, the chance that the funds remain permanently non-recoverable, something that seemed ridiculous when the episode began, is appearing to look more like a non-zero outcome.  

Please sign up for a free trial of FRNT Financial Morning Note.

About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets. You can subscribe to FRNT Financial Morning Note at https://www.frnt.io/morningnote