OKEx Withdrawals Still Suspended, OKB Price Plunges: What Happened?

KEY POINTS

OKEx suspended withdrawals indefinitely after its founder was taken into police custody in China
The OKEx founder holds one of the cryptographic keys needed to authorize withdrawals
Markets reaction was swift, with a massive drop in the price of OKB token

OKEx customers still cannot take out their funds after the cryptocurrency exchange has suspended indefinitely its users' ability to withdraw last Friday after a police investigation in China. The markets reacted to this news with a slight drop in Bitcoin and a massive drop in the price of OKB, the exchange's native token.

While Bitcoin has recovered, OKB's price has plunged and is still down 22% prior to its value before the news broke out.

Last Friday, OKEx suddenly suspended withdrawals, citing that the exchange could not contact one of the holders of the keys needed to sign and authorize withdrawal transactions. OKEx CEO Jay Hao assured customers this particular key holder needed to cooperate with the police due to a personal issue.

It was later revealed that this person was in fact Star Xu, the founder of OKEx. Earlier reports, citing Chinese news site Caixin, said he was arrested. However, those who could understand Mandarin clarified that the news from Caixin actually said Xu was "taken away" by the police.

Proud to be an ex-Caixin writer but the original tweet got something wrong: he was not ARRESTED. He was "taken away" https://t.co/yQoYY13XGe
— da-bing/ 饼兄/ brother bing / soulbound bing (@hotpot_dao) October 16, 2020

For OKEx to authorize withdrawals, it would need the cryptographic signatures of Xu and other private key holders. Without Xu, who holds one of the private keys, the withdrawals could not be facilitated.

OKEx assured its customers that the funds were safe and the exchange was not hacked. "We will resume digital assets/cryptocurrencies withdrawals immediately once the concerned private key holder is able to authorize the transaction," OKEx said in a statement.

The market reaction was swift. Bitcoin fell from $11,501 to as low as $11,200 on Friday before closing at $11,330.

OKB, however, was not as fortunate as Bitcoin. While the benchmark cryptocurrency has since recovered, OKB dropped $6 to $4.05, a 33% decrease.

Since then, OKEx has not made any major announcements other than asking its customers to wait. News outlet Decrypt reported that OKEx Telegram groups and community managers were trying to quell customer frustration directed at them.