Earlier this week, it was revealed that OKEx had frozen all crypto withdrawals from its platform over concerns about a private key holder. OKEx is a leading crypto-asset exchange that processes a material percentage of the spot and futures volume in the industry.
OKEx said that one of its private key holders was working with a public security bureau. He had been out of contact since he started working with the bureau, so they could not process withdrawals.
As a result of this news, the price of OKEx’s native OKB coin slid. The coin fell around 10% in the hour after this news was released.
Despite subsequent reassurances by company CEO Jay Hao, the coin has continued to slide lower.
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OKEx’s OKB Coin Slides Even Lower
OKB has dropped 20% in the past 24 hours as fears have persisted about OKEx, despite reassurances by the company that user funds are safe. It’s worth noting that companies like Crypto Quant, which tracks crypto market data, have noted that no funds have moved out of the company’s known Bitcoin wallets. This suggests that user funds are safe.
Some believe that OKB is falling due to an increase in short exposure.
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Implications on DeFi
Analysts think that even if OKEx’s functionality returns to normal soon, investors will continue to migrate their capital to decentralized exchanges. Centralized exchanges have been seeing increasing pressure over recent weeks and months from regulators, which culminated earlier this month with the CFTC charging BitMEX over derivatives violations.
Qiao Wang, a notable crypto analyst, says that the ongoing situations with decentralized exchanges will drive capital to decentralized exchanges, especially swap and futures platforms:
“Hard to overstate the importance of 1) Ethereum L2s and scalable L1s coming online, and 2) What happened to Kucoin/Bitmex/Okex over the last 2 weeks. Timing cannot be better for decentralized futures/swap exchanges to finally take off in 2021.”
Decentralized futures and derivatives platforms, in general, have struggled due to high block times and sometimes high transaction fees. But with the introduction of scaling solutions, there may be decentralized derivatives experiences that emulate that of centralized platforms.
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Featured Image from Shutterstock Price tags: OKBBTC, OKBETH, OKBUSD Charts from TradingView.com OKEx's OKB Crypto Slides Another 20% as Fears Around Exchange Fester