OKEx Suspends Withdrawls

[gentlemand]

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.

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[stompix]

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QuadrigaCX even though the owner died, even if he gave access to his private keys, there were no funds at all to be withdrawn.

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:

Multiple accounts have triggered our risk management system. As a result, those accounts have been automatically banned for internal transfers. To ensure the safety of your assets, we'd like to remind users not to engage in unauthorized platforms.

Your funds are safe
@OKEx

Just lol...

[gentlemand]

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?

[gentlemand]

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?

[figmentofmyass]

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'.

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

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?

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.

[adaseb]

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.

[oriolpont]

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.

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.

[stompix]

UPDATE: Oct. 23 at 2:00 pm UTC
At this time, withdrawals from OKEx are still paused.  User funds remain safe and unaffected.


UPDATE: Oct. 26 at 11:30 pm UTC
Withdrawals on OKEx are still paused. The security of user funds is our top priority. All user funds remain safe and unaffected.

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.

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

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

Within the first hour of the token’s availability, five institutional investors reached out to the venture, which charges a 1% fee on the swap plus a fee for a regulatory check, Zulu CEO Daniele Sestagalli said in an interview. Users wishing to swap back to their OKEx accounts -- if the exchange unfreezes withdrawals, for instance -- have to pay a 1% fee as well. The minimum order amount is 100 Bitcoin, he said. Bitcoin is currently trading around $13,000..

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.

[gentlemand]

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.

[stompix]

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, 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.

[gentlemand]

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.

[stompix]

And another week, full of updates this time:

Nov 4, 2020·
Withdrawals are still paused, funds are safe

Nov 6, 2020
All user funds on OKEx remain safe & unaffected.

Nov 9, 2020
Withdrawals from OKEx are still paused. User funds remain safe & unaffected.

Nov 12, 2020
Withdrawals remain suspended with user funds safe & unaffected

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.

[figmentofmyass]

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.

[malevolent]

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.

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.)

[oriolpont]

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:

The reason for the suspension of withdrawals in this specific incident was because a private key holder was not able to authorize transactions. OKEx has always used a backup mechanism for private key holders to ensure that each private key holder can trigger the activation of the backup private key in the event of long-term incapacitation, such as death or memory loss.

However, we unfortunately failed to include other specific scenarios, such as private key holders becoming unreachable due to unforeseen circumstances in our contingency plan. In this specific incident, therefore, the ultimate resolution for the private key holder’s short-term incapacitation was not a technical one.

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.

[gentlemand]

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.

[figmentofmyass]

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:

The reason for the suspension of withdrawals in this specific incident was because a private key holder was not able to authorize transactions. OKEx has always used a backup mechanism for private key holders to ensure that each private key holder can trigger the activation of the backup private key in the event of long-term incapacitation, such as death or memory loss.

However, we unfortunately failed to include other specific scenarios, such as private key holders becoming unreachable due to unforeseen circumstances in our contingency plan. In this specific incident, therefore, the ultimate resolution for the private key holder’s short-term incapacitation was not a technical one.

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.

[stompix]

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

1) Our hot wallet system has used and will always use a multisig mechanism for authorization;
2) Each private key (yes, we have multiple private key holders) has a backup; there will never be assets lost due to unforeseen events happening to a private key holder;
3) The withdrawal pause was unrelated to any technical problems on our platform.

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.