Police department in Shanghai arrested StarXu, founder of crypto exchange OkCoin and kept him in custody for 24 hours, assisting an investigation into investors’ accusations that OKEx manipulated Bitcoin futures on its platform.
Chinese business media reported on Tuesday that, since the night of September 10, Xu had been answering at the Shanghai Police’s Weifang Xincun precinct. According to media, police wasn’t satisfied with the answers and the case had been transferred to the police department in Beijing, together with materials gathered so far. “Whether the Beijing department will launch a further investigation is up to them,” a police officer from the Shanghai precinct was quoted as saying in the latter report.
According to Chinese media Caixin, a group of investors filed complaints against crypto exchange. They claim that they lost a significant amount of money on OKEx because of a system crash, they alleged the platform orchestrated. The investors blame that their futures positions were forced liquidated on Sept. 5 when the crypto market faced a major fallback. At the same time, when prices were experiencing a major down trend, OKEx’s service crashed, leaving investors without enough time to clear their positions prior to the forced liquidation.
OkEx had not published any official statement in its defend on alleged system crash issue. When they were asked about the allegation’s reality, they simply refuse to own any responsibility by saying that they are not aware of such a problem. The firm further said that Xu was the founder of the OKCoin exchange but now is the head of OK Group. As such the company claimed Xu currently does not represent OKEx “in any way” since the exchange does not belong to the group. They also stated: “It is unfortunate that the story was twisted.” A Chinese business registration database indicates that OKEx belongs to a company that also operates OKCoin.