Bitcoin Forum

Cryptocurrency exchange OKEx suspended withdrawals after police investigation but it has given very little information about what is happening.
Three hours ago, the exchange published this announcement (link (https://www.okex.com/support/hc/en-us/articles/360051090391-Suspension-of-Digital-assets-Cryptocurrencies-Withdrawals)):



OKex has not explained which government is behind this investigation, although most believe it was Chinese police or agents.

The explanation given in this announcement is that one person or entity is a private key holder that he/she is now cooperating with government agents.
Was this a multisig wallet? Is it that OKex hands the keys to one employee or partner? I don't understand a lot how one entity can have access to private keys and there is not a backup plan for cases like this.
So what happens if the Chinese or another government asks this holder to hand over the private keys?

The fact is that with centralized exchanges we have to trust these institutions that they will perform the actions we asked and not mess with our funds. After everything we have seen starting from the early exchanges until today, we should now be more careful and trust only ourselves. Bitcoin is not about exchanges but freedom of transactions and does not require a third party to run.

A complete list of why we should not trust our Bitcoin with exchanges is on this link (https://bitcointalk.org/index.php?topic=5090869.0).

Hold your keys to own your Bitcoin.

So this was the current reason for a sudden 300$ drop for BTC. I hope this investigation ends today and they resume the withdraw from today. So, the market recover fast. Hope there will be no negative news after the investigation ends. Otherwise the market will be fall badly I think.

what are you talking about?
for the past 6 days bitcoin price has been going up and down from $11100 to $11700 and back multiple times. doing the same thing which is also within the range of <5%-10% doesn't need any reason. it is simply the daily market fluctuations.
there is no denying that there are always some newbies who panic sell whenever they read any kind of slightly negative news but still when the price change is tiny, it doesn't need a reason.

This drop was connected as it happened exactly when OKex halted withdrawals and as you said some noobs panicked. I think that you mistaken my intention on what I discuss here. I posted this because it is another reason why we should not trust exchanges and this is clear from the post. I don't have any reason to support OKex or other exchanges, I saw that nobody wrote about this so I gave my opinion.

[Edit] I will remove the price information from the title after reconsidering. I'm not a trader and I don't think that anything that happens to OKex can influence the long term potential of Bitcoin.

There's probably another case of money laundering or something that's unrelated to OKex operation. What's weird though is that the other private key holder went dark on OKex.

"Cooperating" is a nice way to put it but I'm guessing he was arrested somewhere and just informed the office of what happened.

Another case that reminded of that member who said keeping funds on top exchanges is better than keeping it in your wallet because they earn rewards  ;D

They just announced that Okex founder Star Xu was arrested by police, but we are still waiting for confirmation of this news.
One thing is sure, withdrawals are still disabled and not working.
Original source information article:
http://finance.caixin.com/2020-10-16/101615507.html

His social media Weibo profile is also gone :)

https://i.imgur.com/t3t94KY.png
https://twitter.com/BoxminingNews/status/1317022633762852864

People do really easily panic when they do really read up on these kind of events which isnt something new specially if exchangers do have current issues which in result to hold up withdrawals.
For now theres nothing we can do but to wait up on the word on whats the actual reason and just hope that it will not be an another exchange to close its doors due to severe issue.
As expected where known or big exchange platforms are always prone when government does have a vacant time on investigating things up.  :D

Not the first time though that Star Xu was arrested on being questions by police, OKCoin’s Star Xu Questioned as Police Investigate Bitcoin Futures Allegations (https://www.coindesk.com/okcoins-star-xu-questioned-as-police-investigate-bitcoin-futures-allegations), this was two years ago. So let's see how this drama will turn out, as it has affected the market already with some minor dip.

Exactly


It seems you were correct. Latest news report that Mingxing "Star" Xu the founder of OKex and a senior executive, is under investigation, maybe arrested already:

https://cointelegraph.com/news/okex-founder-reportedly-under-investigation-as-exchange-suspends-withdrawals

The price declined is probably resulted by the panic from Okex matter! But it's not important at this point! What I know Okex is a Hong Kong based company so it is easy to assume that Chinese government is behind all these!

What surprises me is that all big Asian exchanges are being attacked by the enforcement agencies. Few weeks back we had Similar type of new came from South Korea and now from Hong Kong. They are becoming very soft target for the enforcement agencies. If they can't prove anything, thy can just charge the exchanges with money laundering. That's easy!

Didn't Mr Xu keep everyone's private keys in his girlfriend's grandmother's cupboard? And he had his employees trading on Okex's previous incarnation to keep the illusion up. And if I remember rightly he was 'investing' customer funds in crappy investment schemes, or maybe that was Huobi.

Lepoards and spots and all that.

But the question, is the arrest crypto related on not? And as a security precautions, OKeX suspends everything until everything is clear. I can't remember, bu it seems there was a exchanges that was raided up by the Chinese authority recently, is this connected or not? But the damage has been done, it has impacted the market already as there was a wild price swing after this news surfaces.

Edit: it was Gate.io and not OKeX.

Who designed their system to require ALL multi-signature keys to sign instead of a majority?  Talk about one of the stupidest decisions I've read about this year.  

Suppose one got hit by a car, are all of OKEx's funds lost?

Or is this just an exit scam? 

Remember the rule:  if you aren't trading, don't leave bitcoins on an exchange, you don't own them, you are just a creditor.

Its looks like another exit scam of an exchange .hopefully not,  How come his been arrested but still have time to disable the account . something fishy with that if that was  true you don't need to disable one of your social media  accounr this is another way to contact you personally by the people know you . not unless you are hiding something that you don't want to get caught.

I doubt it's an attempt to exit scam. The scenario would have been the private key holder/s running away with the funds which forces the shut down of the exchange, the customers filing a class suit, then police officers going after them.

About the deletion of account, there's probably a hired PR that handles his social media. It was probably done to hide incriminating evidences.

---

Another tweet that supports the money laundering angle

^ Comes with photos but the letters are in Korean or Chinese (I don't know). Visit the tweet if you can understand it.

I think Star Xu is just one of those who has control over private keys, but the exchange may have been ordered to suspend business until further notice - I don’t believe anyone would be so stupid as to allow what happened to Quadriga exchange when one man is allegedly taken with him to the grave around $200 million of user funds.

Human stupidity is unfortunately endless, but I don’t believe that’s the case here - I would put this in the category of classic pressure from the Chinese authorities on what is illegal in Chinese territory, and we all know that Hong Kong is still playing under some of its rules that China disapproves.

okex is a big exchange and until there's no incident of running or their representative didn't answer anymore the questions of their worried users then we cannot call them scam.

For now the only thing we need to do is to monitor the latest updates to see on what will happen unto them and hopefully they will be back on operation after that incident resolve.

That's why it's really important to consider where you will store your coins before investing in crypto. "Not your keys, not your coins" is like a bitcoiners' mantra nowadays.

There's been red lights since they came to prominence however many years ago it was. Memories seem short as ever. I never quite figured out how they moved beyond their volume bot zero free days so smoothly.

Hopefully it's cleared up rapidly but it should be a reminder to its users.

I guess they have already imagined that scenario, those keys are not in that person's head, they must be stored somewhere, in some device or a paper or whatever. They must have something planned, if not, their customers can be in a dangerous situation.

Let's just wait how they going to fix this things out, maybe sooner at later we will get latest news or update from them that we are able to widraw our balance  for now let's just wait.

And for the storing your crypto i agree  with that,it should be stored always in secured place which is your own wallet with your own keys  use only exchange for trading porpuses.

This is the main reason for Bitcoin falling in price today. There have been some scandals regarding centralized exchanges recently starting with Bithumb, Kucoin, Bitmex, and OKEx. What will the next exchange be in trouble? I'm thinking of Binance and Houbi.
Centralized exchanges have performed poorly this year. They list ambiguous projects, have been accused of fraud, and have security concerns.
Centralized exchanges are indirectly destroying the crypto space with their scandals.
Particularly OkeX, they recently requested $ 1 million for listing a project called LAMDEN. They guarantee their listing and promoting them to everyone.
The $ 1 million fees are too high and unreasonable.
https://twitter.com/stuartrfarmer/status/1316074581040328706

This drop was exactly timed with the news, happened the same time all over exchanges, yes, it was panic but it's not something that happens daily, we had days and weeks of the price being flat as the Bonneville Salt Flats, besides I don't see why this would not trigger some panic selling, this thing happens in other markets too, just think of Musk's tweets about his own stocks.

About the arrest, this is China, common people, how many times have we heard news about exchanges getting raided by the police and then nothing really bad happen? Remember that Star Xu has been arrested in 2018 (https://www.coindesk.com/okcoins-star-xu-questioned-as-police-investigate-bitcoin-futures-allegations) and then released.

OKex withdrawals has suspended, seems like users are getting worried about their funds, they make appeal let them perform to make withdrawal. OKex has never had a major hack before and I wish it might not turn exit scam process. Until now no phishy things happen, so no trust to rumor. Rely only on further announcements from OKex.

There've been many question marks about their behaviour in the past. Just because you haven't been hacked does not mean you're a wonderful, wholesome person. Hopefully this will be resolved rapidly but no one should be thinking places like this are as solid as a real financial institution.

This is quite scary for traders of this exchange, they have no control now and they have to wait for an update, that will sometimes lasts from several days to weeks, another story about centralized exchange having issues hope they can fix this quick, only put your coins when you are going to trade but never store a big amount it's to risky.

Lots of confusion, but as per OKEx is still suspended.

Whale alerts tweeted that a huge amount of Bitcoin, 3500 BTC was move from OKeX to Binance. But OKeX quickly clarified that those addresses does not belong to them so it was a mislabeled.

https://twitter.com/OKEx/status/1317153738230956032

That's the problem with whale alert though, anyhow, let's see how it pans out.


https://www.okex.com/academy/en/okex-confirms-all-user-funds-safe-non-withdrawal-platform-ops-functioning-as-usual

Yikes.

Yikes!

Damn straight, and I think everyone in crypto from complete newbies to veterans ought to come to the realization that crypto exchanges are not "real financial institutions" in the sense that we consider banks to be.  A lot of them are still in Wild West territory where rules haven't been established as to their regulation and so forth, and it seems like half the time when an exchange hits the news, most people don't even seem to know what country the exchange operates out of, much less who owns it, or any of the other info that you could find out easily about a bank or a stock brokerage.

I've heard of OKex but never used them.  Are they one of the Asian exchanges with a decent reputation?  In any case, if the founder got arrested for any alleged wrongdoing involving the exchange, that doesn't bode well for OKex's customers.

Yup. Reminds me of when Gox went down. There were people with the actual gall, or delusion, to say it was 'too big to fail'.


One autist on a beach ball is on a par with HSBC?

This twitter user sums up what happened and it is all very strange. OKEx lied has given some contradicting statements quite a few times during the day.

https://twitter.com/WuBlockchain/status/1317290950943600640

The exchange wants to pass it as some personal matter of the CEO that affected their business.
Personal matter of the CEO and the exchange suspends the withdrawls, it is ridiculous.

Yeah right.
Like people should have relied on what MtGox was saying or Quadriga or all the rest?
Remember when CZ was threatening a Japanese newspaper with defamation lawsuits while he was packing his bags and fleeing Japan?
Funds are SAFU!


They are OkCoin, the fathers of volume faking alongside the mother of all faking Huobi.
Seems like all Asian exchanges are going to be involved in some serious scandals that might be the end of them pretty soon.
Binance has fled HK, Japan then Malta and now operates from nowhere, Upbit has been raided by the police, Bithumg the same, Bitfinex....lol.

It looks like this news have affected their mining pool (https://www.okex.com/pool) too.
Okex pool's hashrate has dropped by ~42% during the last 24 hours!

I assume more miners will switch to other mining pools because of the withdrawal suspension.

his wife and mother had copies of the private keys. :P

this was the policy when CZ was working there.


who knows what's happening at okex several years later though.

anyway, fingers crossed for okex customers. this isn't the first time star has been in police custody. it's not over yet. ;)


it was both of them lol. looking back, it makes sense considering neither of them were charging trading fees. their profit had to come from somewhere.....

This is what I'm been suspecting all along, OKeX wanted to distance themselves with their CEO to look like it has nothing to do with him, but it seems it is related after all, and what private keys held by wife and mother or at least his family members? I don't think that is a good security practice and I wouldn't trust my money with them with that kind of 'attitude'.

Still there is no progress of this issue, according OKEx twitter account there's no update after 16th October. I just hope the guy of OKEx key holder is safe and sound. Much bad news all around but bitcoin holding strong at $11k. Everyone is just waiting for OKEx announcements regarding on withdrawals issue and wish everything back into normal.

This is the WORST thing one can imagine any exchange doing. They have given NO updates. They banned many people from Telegram, who tried to ask the reason. I myself tried asking what is the connection between locking funds and investigation, but I too was dumped from the group.

No matter what happens ahead, I have not seen a more CARELESS and ARROGANT support service!

Not a good sign. I hope it's not another Wex.nz situation, where the administrators gave up the private keys to government agents under duress.

The contrast between Bitmex's recent case and this one showcases the importance of proper custodial wallet setups. Centralized services are already risky enough. OKEx adds another layer of risk since the CEO runs things in such an opaque manner. I really wonder how the keys are backed up. :-X

Yikes! Just another reason to avoid fiat IMO.

The QuadrigaCX was an entirely different issue. Here the issue with OkEX is that one of the owners is in prison so he can't use his sig to allow withdraw transactions. With QuadrigaCX even though the owner died, even if he gave access to his private keys, there were no funds at all to be withdrawn.

That exchange was run like a ponzi scheme pretty much and only processed withdraws when someone did a deposit. From what I last heard, the guy deposit customer funds to leveraged exchanges like Bitmex and Bitfinex and assumed BTC would go to like $50K back in 2018 and ended up being liquidated when it hit $3K back in Dec 2018.

Telegram is  the last place one would  expect to find  the truth. It appears Xu is the only person who keeps the keys from OKEX cryptos, in other words, he doesn’t trust anyone working for him. If this is true then his awry doings (if any)  threaten all OKEX's customers. From now on I will think before topping up my account on OKEX. Luckily it's empty at the moment.

This was going to be one of the places I got rid of my varying shitcoins. After this absolutely no fucking way am I doing it. This is amateur hour to the max. I always knew he was a willy but creating the circumstances where something like this can happen adds another 7 inches to it and Peyronie's.

The difference and the one that seriously counts is that we're talking about the Chinese police, you know, those guys who have no problem arresting and keeping hidden even the chief of the Interpol and sentencing him to whatever they could. At least in Canada, you would have known how the thing is going, there are lawyers, people will talk, in this case, it's just waiting, the exchange could open again tomorrow with no problem or all the coins and funds would be seized, like tossing a coin.

And the update:


Just lol...

https://www.okex.com/academy/en/okex-confirms-all-user-funds-safe-non-withdrawal-platform-ops-functioning-as-usual

They've resumed P2P trading, which isn't really saying much, and the 'buy crypto via fiat gateway' option is reinstated. Anyone know what that is? Since they're saying crypto withdrawals aren't happening still I presume you're buying a nice entry in their database?

https://www.bloomberg.com/amp/news/articles/2020-10-22/frozen-okex-crypto-traders-can-cash-out-but-would-pay-a-price

Every exchange's solution to their problems - 'token it'.

Here's an ominous quote from the article - “My guess is if they were expecting withdrawals to resume tomorrow, they’d tell us,” said Sam Bankman-Fried, Alameda’s chief executive officer, adding that he believes no funds have been moved or stolen. “There’s not been a lot of guidance on what to expect. I think sentiment is weeks to months when withdrawals will open up.”

But then again what does he know?

not exactly the exchange's solution, but a third party's. remember bitcoin builder, when mt gox was collapsing? it's like that.


given the rumors of arrest/government involvement (as opposed to a hack) it does kinda remind me of early 2017, when the major chinese exchanges like okcoin froze withdrawals for a few months. they closed up shop in the end but did make good on customer withdrawals.....eventually.

I don't think getting paid something like 80 cents on the dollar is worth it. Why don't traders just open another account at another leverage exchange like Binance Futures or Bitmex. Then go 100x their account when they think BTC is going to go up and basically try to get liquidated on OKex and get the entire sum on the other account minus fees on both exchanges.

This is actually what many traders did in Poloniex who had their accounts frozen from withdraws for over a year. The leverage was smaller, I think 3x so it would take a lot longer however given the volatility they should eventually get it done.

Apparently their CEO was arrested before in the past and nothing came out of and they resumed operations. So most people are expecting the same outcome.

Wat? Even at the lowest margin tier (which is $50k max, i.e., at 100x salvages $500 max), liquidation costs amount to 0.5% which, at 100x, would take 50% of the margin. Add an additional 0.06% -> 6% and whatever the fees at the other exchange. A ruinous strategy.

Funds are SAFU!

They are doing everything they can but they omit to tell the customers one thing.
If indeed its because the keys are held only by Star Xu then, where is he, which I doubt they really know, and second, how can you claim that the funds are safe as long as a guy whose fate you're not sure about is the only one who can control those.


Yeah, the perfect solution that doesn't work for customers, it's obviously a money printing scheme.


Lol,  this guy knows what he's doing, not interested in peanuts, only 1.5 million and above.
I wonder who those 5 institutional investors are, would be nice to have some names to avoid in the future when it comes to investing.

Isn't Okex's 'OTC' section where a ton of money laundering takes place? It's often mentioned when hacked funds are moving around. Probably them. And if the authorities decide to look a little closer at that then perhaps coin owners will have more to worry about while they have their pet detained.

At the start of the month, I thought that they are waiting for Monday, now I'm beginning to think they are waiting for the results of US elections, hope they will not push the next update to the new year and then to the Chinese new year.
I don't know how legit those are (https://t.co/Tc87NRlk19?amp=1), after all, we're talking about what a police investigation in China so from the start a lot will be censored but it seems  Star Xu is under house arrest and there is a bit of connection with the Huobi case, it wasn't an arrest but more like "cooperation". The so-called investigation might run for 37 days according to them I guess counted from the 18th so there will be no real updates till then.

But, funds are safu!
The only problem is that they might be safu in somebody's else pocket at this point.

Getting on for three weeks of nothing. That's quite something. Hopefully in future people will properly investigate the places they use. As a newcomer you'd see their numbers and naturally assume it was run by competent people. As we all know it's often not quite the case behind closed doors.

And another week, full of updates this time:


It's pretty obvious that the Chinese authorities have either seized the keys from Xu or they have told them not to make a move until they finish their investigation, and somehow they were pretty convincing. Just another wake-up call for people who think that if an exchange is based in Malta or Ukraine or Singapore it can't be touched by other governments, all means zero when the people with the keys get arrested and thrown into prison.

In other news, their mining pool is empty:
https://www.theblockcrypto.com/linked/84229/okex-bitcoin-mining-hash-lost

Probably the exchange is done for, even if they by some miracle strat to return the funds their reputation is damaged beyond repair.

something worth keeping in mind is that this has happened once before to okex, when they were known as okcoin. in 2017, the chinese government audited okcoin, huobi, and possibly others. this was around the same time news was surfacing about okcoin and huobi's diversion of customer funds into high yield investment schemes.

anyway, both exchanges completely shut down withdrawals for months during the audits. there wasn't much media coverage about it because not many westerners were trading on the chinese exchanges at the time, although i do recall some reddit posts and things like that. the government eventually let them cash out their customers and then both left the country, at least in name.

i'm not saying things are guaranteed to play out the same way this time, just saying there is some past precedent. back then in 2017 i assumed it would kill okcoin and huobi's brands (and it did kill btc china's brand---they closed up for good) but they only got bigger afterwards, even in spite of the scandals. so we'll see.

If only there was a way of signing transactions, where m-of-n trusted parties with the right keys could decide if and when a transaction should take place.

(Assuming they aren't all located in the same country at a given time.)

They announced they reopen: https://www.okex.com/support/hc/en-us/articles/360052758931-OKEx-Official-Announcement-Reopen-of-withdrawals-and-other-related-updates

It's still quite vague, but it seems to confirm that the issue was the arrest of Star Xu. Their description of the key backup is quite worrisome, still:


What does that mean? I interpret that they have Star Xu as a necessary part in both the main and the backup paths. That if his main co-signers went missing, he could "trigger the activation of the backup" but only he was able to do it.

That could be read, alternatively, as that there were timelocks involved. However, I think that's not the most likely, for many reasons: they don't explicitly mention timelocks, their known cold wallets are plain multisig with no fancy scripts, suspension covers all coins not just Bitcoin, etc.

Hopefully it's resolved successfully but this should remain a wake up call for everyone. China and anywhere within its influence is pretty volatile when it comes to the financial end of things, and of course the OK crew are proven assholes anyway.

I'd give up a bit of volume and action for the sake of a quiet life in a properly run jurisdiction.

the coins are supposedly retrievable if star xu has memory loss, but not if he's locked up by the police? something doesn't add up. ::)

it's the same as it ever was. ~4 years ago when CZ left okcoin, he said star xu was the sole holder of all private keys. obviously, nothing has changed during that time.

we can't say for sure until withdrawals are actually live again, but this is beginning to shape up as i expected. i'll be interested to see the effects this has on okex's reputation and exchange ranking, although it's always tough to tell exactly with all the volume faking they do.

So the timing of their re-opening plan quite matches those 37 days from which it is supposed Star Xu got arrested.
The whole multisig, back-up keys and all that crap they are telling their users right now is simply a smokescreen


Ok, so, what was then the problem? Crickets...

Now even if the exchange starts working again, one question remains, what has he traded for his freedom, information on customers? Or has he simply given the authorities control over everything there?  Probably European customers will be safe, but I wouldn't want to trade there if I would be living in HK or Macau.