A significant amount of users preferred to seek other options and withdraw their funds. The incentives that the platform offers do not seem to convince users.
More than 29,300 bitcoins ($ 498 billion) left OKEx on Thursday after the cryptocurrency exchange resumed withdrawals that it had suspended for six weeks. The figure is the largest exodus of crypto ever observed on the platform since March when the stock markets collapsed after the declaration of a pandemic by COVID-19.
Data from blockchain analytics tool Glassnode shows that during the significant asset outflow on OKEx, there was also a deposit of 21,600 BTC. The withdrawals and deposits together had a depreciating effect on the exchange’s overall balance, which fell to about 212,000 bitcoins.
The figure is significant if you take into account that on October 31st, there were about 200,000 bitcoins blocked on the exchange. Data from analytics firm CryptoQuant shows that OKEx’s bitcoin reserves suddenly fell off a cliff, even dwindling to roughly 6,000 bitcoins, before showing a slight recovery.
The reports also show that the BTC withdrawn from OKEx would have entered other exchanges, Binance, Huobi, and Bitfinex, which on November 26 recorded considerable income.
OKEx suspended the withdrawals on October 16, claiming that one of the holders of the service’s private keys was “cooperating with a public security bureau where he was required.” The owner was later identified as the founder of the platform, “Star” Xu.
The latter later claimed on a WeChat channel that the investigation in which he was involved was related to the purchase of LEAP Holdings, a company with roots in the Hong Kong stock exchange.
According to Chinese reporter Wu Blockchain, OKEx bought LEAP Holdings to list on the Hong Kong stock exchange. However, questions arose about the millions of dollars “Star” Xu raised to buy the company; there are no further details about it.
OKEx said in a statement last week confirming that OKEx was not involved in fraudulent or illegal activities and that the owner of the private key rejoined its activities. They also denied that company executives suffered any detaining by the police, which they classified as “a rumor without roots or leaves.”
OKEx’s is attempting to retain its users
After all the inconvenience that paralyzed withdrawals from the exchange, OKEx promised to launch a compensation and rewards program to express gratitude and convince customers to stay.
This program includes one-time payments that are proportional to the balances that users maintain: These payments include discount cards and incentives for fares every Friday from December. It is relevant to take into account that the volume of deposits on Thursday may suggest that the exchange’s promises convinced many users.
In a statement, the OKEx team said on Friday that, although it has an extensive backup mechanism to guarantee the activation of private keys in the event of long-term disability, such as death or memory loss of its holders.
Other specific scenarios, such as headlines are losing access due to unforeseen circumstances. Around this, they promised to take action soon.
By: Jenson Nuñez.
