The news triggered a nearly 2.9% fall in bitcoin.

OKEx, one of the world’s largest cryptocurrency trading platforms, suspended withdrawals after the Chinese police launched an investigation that linked to the exchange. (Bloomberg)

OKEx issued a statement briefly describing the reasons for the action:

“One of our private key holders is currently cooperating with a public security bureau in investigations where required.   We have been out of touch with the concerned private key holder.  As such, the associated authorization could not be completed… In order to act in the best interests of customers and deliver exceptional longtime customer service, we have decided to suspend digital assets/cryptocurrencies withdrawals as of [October 16, 2020, at [11:00] (Hong Kong Time)].”

According to Bloomberg, the person above is an unidentified staffer of OKEx responsible for users’ private keys.

The exchange did assure that its other functions remained normal and stable.

The OKEx exchange relocated to Malta from China following that country’s crackdown on cryptocurrencies. It is the second-largest cryptocurrency derivatives platform by 24-hour volume, according to data from Skew.

Whale transfers

Coin Telegraph noted that a few hours before the announcement, Whale Alert, a crypto transaction monitoring service, flagged several large transfers between OKEx and non-descript wallets.

It said that outgoing transfers of 1180 BTC (worth about $ 13.5 million), 50 million TRON (about $ 1.3 million), and 21,000 ether (ETH) went through over a time of six hours.

Coin Telegraph also quoted Beijing-based reporter Colin Wu. Wu said that the OKEx ban on withdrawals may be related to an investigation by the Chinese government of money laundering via cryptocurrency of the proceeds of telecom fraud.

Multi-sig management

Meanwhile, Leo Weese, the president at The Bitcoin Association of Hong Kong, was rather skeptical. He commented on the purported reason for the suspension of withdrawals at OKEx:

“That one person sits in China holding the keys to an entire offshore cryptocurrency exchange is probably the most surprising thing about this industry I learned this year,” he said to Coin Telegraph. “That customers don’t demand transparency about key management comes in at a close second, though.”

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