Okex Legal in China

© 2022 The Block Cryp­to, Inc. All rights reser­ved. This arti­cle is publis­hed for infor­ma­tio­nal pur­po­ses only. It is not offe­red or inten­ded to pro­vi­de legal, tax, finan­cial, other or legal, tax, finan­cial advice. The Chi­na Natio­nal Radio‘s (CNR) “Voice of Chi­na” pro­gram clai­med that the OKEx cryp­to exchan­ge was ille­gal­ly working with Chi­ne­se cus­to­mers in Chi­na, CNR repor­ted on Thurs­day (May 3rd). Chi­ne­se cryp­to exch­an­ges were ban­ned by the government last fall. One in a seri­es of reports on the reve­la­ti­on of cryp­to­gra­phic secrets by Chi­na Natio­nal Radio clai­med that the OKEx cryp­to exchan­ge was ope­ra­ting ille­gal­ly in Chi­na. This has cer­tain­ly been on the radar of Chi­ne­se offi­cials for a long time. In 2018, Pan Gong­s­heng, vice pre­si­dent of the People‘s Bank of Chi­na, war­ned that cryp­to­cur­ren­cy exch­an­ges based over­seas but soli­ci­ting busi­nes­ses from peop­le in Chi­na are still ille­gal. Ten agen­ci­es, inclu­ding the cen­tral bank, finan­cial aut­ho­ri­ties, secu­ri­ties and for­eign exchan­ge regu­la­tors, have pled­ged to work tog­e­ther to era­di­ca­te “ille­gal” cryp­to­cur­ren­cy acti­vi­ties, the first time Bei­jing-based regu­la­tors have joi­ned for­ces to expli­ci­tly ban all cryp­to­cur­ren­cy-rela­ted activities.

OKG Tech­no­lo­gy, a Hong Kong-lis­ted com­pa­ny con­trol­led by OKEx foun­der Xu Min­gxing, said on Oct. 18 that it had been infor­med by its lawy­er that Xu was “cur­r­ent­ly under inves­ti­ga­ti­on by Chi­ne­se poli­ce” and that the com­pa­ny could not reach Xu direct­ly to con­firm this infor­ma­ti­on. In Sep­tem­ber 2017, Chi­na decla­red initi­al coin offe­rings (ICOs) ille­gal and ban­ned their issu­an­ce on the main­land. In respon­se, many cryp­to­cur­ren­cy exch­an­ges – inclu­ding Binan­ce – have deci­ded to ven­ture into gree­ner regu­la­to­ry pas­tu­res. OKex is lis­ted on the CoinMarketCap.com as one of the lar­gest inter­na­tio­nal cryp­to­cur­ren­cy exch­an­ges in the world, clai­ming a dai­ly tur­no­ver of $1.5 bil­li­on through its Bit­coin futures tra­ding pro­duct alo­ne. Howe­ver, with other lea­ding Chi­ne­se cryp­to­cur­ren­cy exch­an­ges, doubts have recent­ly been rai­sed as to whe­ther the actu­al sales figu­res are as high as in the alle­ga­ti­ons of exa­g­ge­ra­ti­on and mani­pu­la­ti­on. A pri­va­te key is a sophisti­ca­ted form of cryp­to­gra­phy that allows a user to access their cryp­to­cur­ren­cy. When it comes to cryp­to­cur­ren­cy, a user usual­ly recei­ves both a public key and a pri­va­te key to send and recei­ve coins, but they can­not with­draw them without the uni­que pri­va­te key. A buy­er can then trans­fer Chi­ne­se yuan to an OTC mer­chant via Ali­Pay, WeChat Pay, or bank trans­fer, for examp­le, and then OKEx credits the new­ly purcha­sed cryp­to to the buyer‘s account as an inter­nal trans­fer that doesn‘t requi­re on-chain tran­sac­tions. Simi­lar­ly, users can also ter­mi­na­te each other‘s assets direct­ly via off-chain inter­nal trans­fers, as long as they have each other‘s uni­que iden­ti­fier on the exchan­ge. In addi­ti­on, finan­cial insti­tu­ti­ons must iden­ti­fy the capi­tal accounts of digi­tal cur­ren­cy exch­an­ges and OTC tra­ders and dis­rupt cryp­to­cur­ren­cy pay­ment flows for the­se accounts.

Foun­ded in 2014 by Star XU, Beli­ze-based OKex is a cryp­to­cur­ren­cy and digi­tal asset exchan­ge that divi­des opi­ni­ons. The com­pa­ny, who­se ope­ra­ti­ons are based in Hong Kong, enjoys signi­fi­cant sup­port. Ori­gi­nal­ly based in Chi­na, the exchan­ge and its sis­ter OKCoin moved to Hong Kong after the Chi­ne­se government ban­ned ICO token tra­ding and are now inter­na­tio­nal­ly ori­en­ted. Among the impres­si­ve inves­tors on the exchan­ge is Ven­tures­Lab, co-foun­ded by Tim Dra­per, a well-known Ame­ri­can ven­ture capi­ta­list and cryp­to­cur­ren­cy advo­ca­te who has made a num­ber of suc­cess­ful seed invest­ments in com­pa­nies such as Hot­mail, Tes­la, and Bai­du. The OKex exchan­ge offers the most com­mon­ly used stan­dard cryp­to-to-cryp­to tra­ding for cryp­to­cur­ren­cy exch­an­ges as well as fiat-cryp­to-to-cryp­to tra­ding. At pre­sent, unfor­tu­n­a­te­ly, the Chi­ne­se yuan is the only sup­por­ted fiat cur­ren­cy. The exchan­ge sup­ports over a hund­red cryp­to­cur­ren­ci­es and tokens with the regu­lar addi­ti­on of new opti­ons. Just days after the Chi­ne­se government pro­mi­sed to crack down on bit­coin mining and tra­ding, cryp­to­cur­ren­cy exch­an­ges Huo­bi and OKEx began pre­ven­ting Chi­ne­se cus­to­mers from acces­sing some of their ser­vices. The move also hit cryp­to­cur­ren­cy and block­chain-rela­ted stocks, though they reco­ve­r­ed some of tho­se decli­nes in U.S. morning tra­ding. While this can be expec­ted to chan­ge in the not-too-distant future, the fact that CNY is the only fiat cur­ren­cy sup­por­ted on the plat­form means that OKex is still very much gea­red towards the Chi­ne­se market.

Here‘s ever­ything you mis­sed about the­se sto­ries, and more in this week‘s edi­ti­on of OKX Insights‘ Chi­na Mar­ket Watch. OKex also offers futures con­tracts for Bit­coin, Ethe­re­um and EOS with wee­kly, bi-wee­kly and mon­th­ly con­tracts. Lever­aged mar­gin tra­ding is also avail­ab­le for futures. Two peop­le clo­se to OKEx told Cai­xin that Xu had been in poli­ce cus­to­dy for at least a week and had not worked sin­ce. As Cai­xin repor­ted on Octo­ber 16, OKEx foun­der Star Xu was taken for ques­tio­ning. Short­ly after, the com­pa­ny issued an announ­ce­ment sta­ting that with­dra­wals of cryp­to assets on its plat­form had been sus­pen­ded. Chi­ne­se regu­la­tors step­ped up the crack­down on cryp­to­cur­ren­ci­es last mon­th with a blan­ket ban on all cryp­to tran­sac­tions and mining, resul­ting in the dis­rup­ti­on of cryp­to exch­an­ges and ser­vice pro­vi­ders with cus­to­mers in main­land Chi­na. See rela­ted arti­cle: Conflux‘s Open DeFi Pro­ject Aims to Con­nect East and West – With Its Own Cryp­to­cur­ren­cy in Chi­na Other inves­tors inclu­de major Chi­ne­se VCs such as Ceyu­an Ven­tures, Lon­g­ling Capi­tal and Giant Net­work Group. In Bei­jing, the Indus­tri­al and Com­mer­cial Bank of Chi­na enab­led direct con­ver­si­on bet­ween the Chi­ne­se yuan and the country‘s digi­tal cur­ren­cy, DCEP, through more than 3,000 ATMs. The spo­kes­per­son added that Huo­bi Pool, the company‘s mining pool ser­vice, has pre­ven­ted Chi­ne­se cus­to­mers from buy­ing and stock­pi­ling miners. The restric­tions are inten­ded to “focus on expan­ding our pre­sence abroad.” It‘s been almost a mon­th sin­ce OKEx, one of the world‘s lar­gest cryp­to­cur­ren­cy exch­an­ges, sus­pen­ded its token pay­ment ser­vices for its cus­to­mers after its foun­der – Star Xu – was arres­ted by poli­ce for no appa­rent reason.