OKEx Incident Could Push More Crypto Users to Defi Protocols

Marco Green

October 17, 2020

The holder of the private key being unavailable hindered the completion of withdrawal authorization.

As of now, it is unclear when the private key holder in question will be able to complete withdrawal authorization.

Major crypto asset exchange OKEx has suspended cryptocurrency withdrawals, announcing that one of the holders of its private keys is "currently cooperating with a public security bureau" concerning ongoing "investigations".

However, this stint was short-lived as Bitcoin recovered despite nearing a crucial level of support of $11,366.

Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5, suggested the news may place the OKEx trading venue in a bad light, but have little affect on bitcoin's reputation.

According to Glassnode, roughly $2.3 billion is trapped in the OKEx exchange due to the withdrawal suspension.

The company's announcement caused shockwaves throughout the crypto industry, leaving many anxious that the situation might be direr than it looks.

"Read between the lines - OKEx has a single point of failure in their key management architecture, and it's now failing". OKEx CEO Jay Hao in a post on Chinese social media platform Weibo revealed that private key custodians at the platform were having "personal problems".

Bitcoin, which accounts for nearly 20 percent of OKEx's daily trading volume, dropped around 3 percent in less than half an hour following the news, while other top performing coins only dipped slightly into the red. Following the halting of withdrawals from its platform, Bitcoin's price tanked over 3% in a matter of a few hours.

Worth mentioning that hours before OKEx made the public announcement, blockchain tracker WhaleAlert noted several massive transfers of bitcoin, ethereum, and Tron between OKEx and unidentified wallets.

Data from CoinGecko showed that the token jumped from $2.90 to $3.33 in less than an hour, recording an increase of nearly 15 percent. Subscribe for daily updates.