OKEx, the crypto exchange giant, had halted withdrawals from its exchange a few hours ago. As one would imagine, investors and traders aren’t too impressed by this development. Further reports of Xu Minxing, the founder of OKEx, being arrested more than a week prior, has made the Bitcoin prices go down, as well.
One of the key issues, however, is that OKEx, in its numerous wallets, holds an incredible amount of Bitcoin within it. According to the data, there’s easily more than $2.3 Billion in Bitcoin within the exchange’s various holdings.
$2.3 Billion In BTC Now Stuck
As it stands now, Glassnode, the on-chain market analysis firm, opted to release data regarding the amount of BTC held within the OKEx exchange. This occurred after the mess regarding the exchange’s withdrawals, and revealed a pretty significant amount of BTC now stuck in limbo.
Glassnode highlighted that about 200,000 BTC, which stands as 1.1% of the total circulating supply, is held within wallets of OKEx. Glassnode hammered the significance of this home by highlighting that this stands as $2.3 billion in BTC currently locked behind the vaults of the exchange.
Jay Hao, the CEO of OKEx, tried to put out fires about the matter, giving users many assurances that their respective funding is indeed safe. He claimed that the inability to pull crypto holdings out of an exchange stands as no cause for alarm, even if 1.1% of all circulating Bitcoin is now trapped in the exchange.
Some Strange Circumstances
The problem only becomes more concerning once you realize that the official capable of accessing all these private keys of these wallets, is currently “out of touch.” Those at OKEx have reportedly been unable to establish contact with this individual. This enigmatic individual had also started to cooperate with a “public security bureau” in regard to investigations into OKEx “where required,” which is obviously something of concern.
With this, a massive amount of BTC is stashed and at risk against coordinated attacks, particularly those targeting centralized points of failure, should there be any. Even excluding that, the threat of a massive transfer of funds is looming above those wallets, at this point.
Massive Withdrawals After Arrests Common
It seems that the major exchanges are having a very interesting time. BitMEX, another heavyweight, saw its founders be accused by the CFTC for the violation of anti-money laundering laws. This came after the CTO, Samuel Reed, was arrested. As one would imagine, the negative sentiments this spawned caused a massive outflow of BTC to occur, with Glassnode tracking all of it.
— glassnode (@glassnode) October 1, 2020
The end result of this was BitMEX seeing a 27% drop in Bitcoin deposits, with the Bitcoin price actually managing to stay stable and even rise during this crazy time period.