OKEx, one of the world’s largest cryptocurrency exchanges, announced a temporary suspension of withdrawals on 16 October. After the news broke, the Bitcoin (BTC) price suddenly fell 3% in 30 minutes on major stock exchanges.
The tension in the market stems from the reason for the suspension of withdrawals and the possible consequences it has.
OKEx says private key holders are collaborating with investigators, Bitcoin is falling fast
The OKEx team said that the owner of the exchange’s private key is cooperating with the Public Security Bureau in an investigation. The team said:
Right after the OKEx statement was released, the price of Bitcoin fell from $ 11,514 to $ 11,190. The 3% decline occurred within 30 minutes, causing the market to retreat.
Bitcoin exchanges usually use a multi-signature system to handle withdrawals from cold storage, ie an offline wallet.
To transfer money from a cold wallet, an exchange often distributes several private keys to owners and managers. In a multi-signature system, all or most of the key holders must be present in order to sign transactions.
In the case of OKEx, Oslo Børs reported that the owner of the private key could not approve the withdrawal. Jay Howe, CEO of OKEx, said:
All transactions on OKEx, except for withdrawals of digital assets / cryptocurrencies, remain unchanged. All your funds and assets are safe. The investigation only concerned the personal problem of the specific holder of the private key. More ads will be released. ”
The Bitcoin price fell on OKEx news for two main reasons. First, OKEx is a large exchange that handles large volumes of spot and futures contracts.
Secondly, when it comes to exchanging relations with China, there is usually increased speculation in the market. Red Lee, co-founder of 8BTC, said:
The withdrawal of OKEx will take place for the first time at 15.00, but will soon be changed to 11.00. It is rumored that more than 800 accounts on a “specific” stock exchange are involved in money laundering across national borders.
Industry leaders were surprised by the news
Liu Weiss, president of the Hong Kong-based Bitcoin Association, said he was surprised by the fact that a person can affect the entire cold storage system. He wrote:
This guy sitting in China holding the keys to an offshore cryptocurrency exchange is perhaps the most amazing thing in the industry I’ve learned this year. However, clients do not require transparency about key management. ”
In the case of BitMEX, for example, when the company’s CTO Samuel Reid was arrested earlier this month, most private key holders could sign transactions.