OKEx Crypto Exchaing Founder Detained and Released in Alleged Coin Fraud Case
OKCoin and OKEx founder, Star Xu, has been detained and then released in connection with fraudulent activity surrounding the WFEE coin project.
The founder of OKCoin, and the world’s second-largest crypto exchange OKEx, Star Xu, was detained on Monday, September 10 by the Shanghai Police over alleged fraud. He was however released the following day after questioning.
Xu detained in connections with WFEE Coin
Local media outlets revealed that he was detained due to a possible connection to the WFEE coin project. Even though Xu is a shareholder in the project, he denied that his company is involved in the project, the reports added.
The reports added that WFEE Coin’s alleged fraudulent activities were reported to the authorities by some investors. This prompted the police to bring Xu and questioned his involvement.
The reports also stated that as a shareholder, Xu can be held responsible for any fraudulent activities done by the company.
Following the arrest, Andy Cheung, head of operations at OKEx wrote on Twitter to clarify that Xu was not under arrest, rather he was speaking with the police of his own free will.
Xu released after questioning
A day following his arraignment, Xu was released by the Shanghai police after questioning. Twitter resource cnLedger translated the original Chinese sources and concluded that Xu’s Shanghai-based company no involvement with the fraudulent activities of WFEE Coin.
The news confirmed that the alleged fraud occurred in Beijing, not Shanghai, and the case has been transferred to Beijing authorities.
It is still unknown how the Beijing police will handle the situation moving forward.
The case of WFEE Coin
The cryptocurrency started trading earlier this year, mainly on OKEx. The biggest hit to the coin’s value came over the past few days, with investors watching the coin’s value plummet 90%, freefalling from $.00033 per coin to $0.00012475.
The Shanghai police responded to numerous complaints from investors regarding the tokens and the purpose of OKEx’s fundraising efforts. Shanghai police report
Unfortunately, this isn’t the only controversy looming over OKEx’s leadership.
Just last month, OKEx was in the news after it forced a $420 million clawback on investors after one trader was allowed to amass a position of $460 million. The position couldn’t be filled upon the liquidation in the end.
Since OKEx couldn’t liquidate by itself, it had to skim the majority of the position of the profits of its users. This scandal led to concerns by investors and analysts who fear that traditional banking practices are creeping into the cryptocurrency space.
OKCoin was also embroiled in a controversy of its own earlier this year. A Chinese investor filed a lawsuit against the exchange, claiming that he was unable to withdraw his Bitcoin Cash on time following the Bitcoin hardfork in 2017.
Following the news of his retention, the trading volume of OKEx dropped by roughly 3 percent, according to data obtained from XBT.net.