OKEx Recent Issues ‘Exposed Weaknesses in Internal Processes’ But Working on Correcting Them
On October 16th, OKEX users were shocked as the exchange unexpectedly halted all cryptocurrency withdrawals on the platform – stretching the halt to over a month. After the “normal withdrawal services” were resumed on November 26th, OKEX CEO Jay Hao joined a live Ask Me Anything (AMA) session on the official 27,000+member Telegram channel to explain what went down during the withdrawal hiatus on the exchange.
The withdrawal issues started on October 16th, when one of the ‘private key holders’ on OKEX multi-sig wallets was taken into custody by the Chinese police to help in an investigation. The exchange shut down its withdrawal services while all other operations remained functional during this period. The exchange stated they could not provide authorization on withdrawals on the exchange as they could not access the keyholder at the time.
In a transcript of the AMA session, Jay Hao explained the withdrawal pause caused “a lot of uncertainty” as the exchange was not sure when withdrawal services would return. The event has since caused an enormous impact on the exchange’s business activities, Hao explained.
“We have seen an understandable decrease in trading activity on the exchange.”
Following the five-week withdrawal pause, OKEX experienced one of its largest Bitcoin outflows shortly after the services were resumed. Over 29,300 BTC was moved out of the exchange on November 26th, recording its second-largest outflow yet in 2020, only bettered by the March crash withdrawals.
However, the hiatus did not significantly affect the BTC market recently reached a new all-time high as the market responded wonderfully to the news. Hao further explained,
“The incident highlighted the cryptocurrency market's maturity — reflected in the price of BTC and other major assets in their resilience to the news.”
The China-domiciled exchange is working on new developments to prevent such withdrawals from happening in the future and win back its customers' trust and confidence.
First, the exchange will implement a new hot wallet system that will follow a four-stage process – private key generation, its backup, enabling a master private key generation, and its backup key. Moreover, each private key will have a backup key that will ensure “there will never be assets lost due to unforeseen events happening to a private key holder,” Jay further said.
OKEX new hot wallet system
A “new exchange transparency plan” that allows the public to view and monitor their wallet addresses at any time will be launched in the coming months. The exchange also plans to reward the loyal users who deposited or held tokens in their accounts during the exchange’s arduous period.
Additionally, Jay addressed the rumors surrounding the withdrawal pause and OKEX founder, Star Xu. In a coincidence, OKEX withdrawals resumed shortly after Xu was released from police custody, causing a buzz that he was the mysterious “private key holder.” Furthermore, Jay bashed rumors that the exchange was facing investigations on money laundering charges. Jay said,
“As stated in many previous announcements, the investigation has no relation to OKEx.”
“We have established, implemented, and continue to refine and Anti-Money Laundering, Anti-Terrorist Financing, and Trade & Economic Sanctions Program since our inception to ensure a robust and compliant digital asset trading platform.”