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  • OKEx users are still in trouble as the cryptocurrency co-founder remains under investigation.
  • Other Chinese trading platforms may face similar issues, as Chinese authorities tighten crypto market regulation.

OKEx, one of the world’s largest cryptocurrency exchanges, stopped trading and froze withdrawals on October 16, after the Chinese police launched an investigation against the company and arrested one of its co-founders. Several days later, the platform re-activated the P2P trading, but withdraw functionality is still unavailable for OKEx customers, who feel desperate to get their money back. Some of them even have taken their quotes outside of the exchange to other communication channels and try to sell their USDT and BTC locked on OKex with 10%-20% discount.

Read the in-depth story of what happened to OKEx here

No hope, no money

According to the popular Chinese cryptocurrency reporter Colin Wu(@WuBlockchain), Star Xu, the OKex official who is under investigation will stay under residential confinement, meaning that he is suspected of a criminal offense. In this case, the investigation period may last from 37 days to half a year. Shedding light on how the process is arranged in China, Wu notes that Xu may be locked in a small room with white walls on all sides, no windows, and no sunlight all day long.

 

The expert also explained that the authorities often resort to residential confinement to avoid the 30-days limitation applicable to the ward detention prior to sentence. In the case of residential custody, they can keep the suspect under control for six months. 
 
Considering that Star Xu is the one who holds the private keys of the cryptocurrency exchange wallets, this development may further frustrate OKex users who want to get their coins back. 

Huobi next in the line?

The senior officials of another Chinese cryptocurrency exchanges may face the same issues. Earlier this week, rumours of the Chief Operating Officer of Huobi, Zhu Jiawei being under investigation hit the market and spooked the cryptocurrency traders. 

While Jiawei is a less critical person for Huobi, the news caused massive cash outflows from the exchange and crashed its native token Huobi Token (HT) by over 10% in a matter of hours.

The trading platform denied the rumours and confirmed that it continued operating as usual; however, the harm was already done. At the time of writing,  HT/USD is changing hands at $3.3, down over 5% since this time on Tuesday.

According to Colin Wu, Huobi is the exchange with most Chinese users and the most extensive Bitcoin stock in the world. Thus, the troubles will not pass unnoticed.

China cracks down on crypto

The recent developments may signal that the Chinese authorities are taking a strict approach to the industry before the official launch of its own central bank digital currency (CBDC). 

As it was earlier reported, China has proposed draft legislation to ban issuing, selling, and buying private cryptocurrencies on the country’s territory. If the law is enacted, all digital coins except for the digital yuan will become illegal in China.

Also, the local media outlets report that purchasing crypto with RMB and selling it for the foreign currency may be considered as money laundering, as well as selling crypto purchased with foreign currency to withdraw RMB.