The crypto and bitcoin (BTC) markets tumbled earlier on October 16, 2020, after one of the biggest cryptocurrency exchanges suspended all withdrawals without any previous warning.
OKEx crypto exchange tweeted that crypto withdrawals were suspended. That announcement sent a shockwave throughout the entire ecosystem.
Withdrawals of digital assets/cryptocurrencies @OKEx are currently suspended. Other functions are up and running. Your funds and assets are safe and not affected. Details: https://t.co/vMehdsZs1b
We sincerely apologize for any inconvenience. Further announcements will be made. pic.twitter.com/t14l7z0EUL
— OKEx (@OKEx) October 16, 2020
The markets reacted immediately with a steep plunge in prices. Bitcoin lost almost 2.8% within minutes dropping from $11,540 to around $11,200, according to Tradingview.com. in roughly an hour that followed, BTC had managed to recover back above $11,300 but still down by almost a percentage point on the day.
As expected, the exchange’s native token took a major bashing with OKB losing almost 15% within the same time frame. From an intraday of around $6, OKB lost significantly to settle just below $5. That was its biggest one-day selloff for over seven months.
What Transpired?
Rumors started to increase about a Chinese regulatory crackdown on the crypto exchange as Bloomberg had run a story highlighting on a police investigation earlier in the day. Red Li, the Chinese media firm 8btc founder, said that the operation of this platform was not jeopardized since it was a “personal problem” affecting CEO Star Xu.
CEO of #okex just pinned a weibo, saying that it's only the "personal problem" of privatekey-holder and the operation of the platform is not affected. I could only hope Star Xu is ok and money are SAFU. pic.twitter.com/DEfvjS9BzN
— Red Li (@redtheminer) October 16, 2020
However, within an hour of that publication, Li said that panic had already started to ensure that Tether (USDT) was being dumped at a discount.
ppl are dumping #usdt in #okex at a discount. bank run may affect other CEXs. pic.twitter.com/xDzmd8C0Nd
— Red Li (@redtheminer) October 16, 2020
The dumping raised more questions about the reasons why and how a major global crypto exchange can have their private keys assigned to only one person. The person has apparently been “out of touch,” according to staff working at the company.
If You Do Not Control The Keys, You Do Not Control The Coins
The whole scenario has brought back the old adage of “not your keys, not your coins.” All of the centralized exchanges have the power over all assets that they have under their management just like it is the case with the banks’ ability to close their physical doors.
Many experts and commentators have now started to remind traders and investors that things need to change if they want to avoid such predicaments of top executives ‘running’ with their money. Observers say that investors are never in control of their money unless they hold their private keys themselves.
A crypto trader, Crypto Owen Wilson, reiterated the notion:
“Apparently it’s not the brightest idea to keep all your digital assets on OKEx or any exchange for that matter.”
What will happen next? Time will tell.
