Cryptocurrencies

After six weeks, OKEx to finally resume withdrawals

The exchange is promising to rebuild trust and prevent such an incident from happening ever again—but for some users, the damage is done

OKEx has announced that it is going to resume withdrawals for users—six weeks after they were suddenly suspended.

The crypto exchange took the drastic move “to safeguard users’ funds” on Oct. 16, it said in a Nov. 19 news release seen by Modern Consensus.

Last month’s disruption was linked to the fact that one of its private key holders was co-operating in an investigation.

OKEx said it had since been confirmed that it was not involved in any wrongdoing or illegal activities, meaning the private key holder was able to return to his role.

The exchange added that, because of how it maintains 100% reserves, users will have the freedom to withdraw all of their funds immediately if they so wish.

Far from over

Although this incident has now drawn to a close, OKEx has acknowledged that it has a long way to go before it can regain the crypto community’s trust.

“We are extremely pleased to be able to announce the return of a full service for our users and would like to thank them for their continuous support during this difficult time,” OKEx CEO Jay Hao said. “We apologize for the inconvenience caused and know that we must continue to work diligently to restore their confidence.”

Withdrawals are going to return by Nov. 27, and a “significant” loyalty reward campaign is set to be rolled out to compensate users.

News of the outage prompted Bitcoin to fall by 3%, while the Chinese exchange’s utility token, OKB, plummeted by as much as 15.5%.

On Twitter, affected customers—many of them angry—asked why withdrawals were dependent on one individual in the first place.

Offering a little more detail about what happened on its website, OKEx said it had “always used a backup mechanism for private key holders to ensure that each can trigger the activation of the backup private key in the event of long-term incapacitation, such as death or memory loss.”

Despite that, the exchange had failed to anticipate what would happen if a private key holder became unreachable due to unforeseen circumstances (it remains unclear why this recent incident wouldn’t fall under the safeguards that were already in place.)

Looking ahead, OKEx says that it is going to “strive to improve internal processes as soon as possible to prevent any similar situations from happening in the future.”

Enough is enough?

During the course of the outage, several crypto experts—including Bitcoin Association president Leo Weese—expressed exasperation that protections weren’t in place to prevent such a prolonged suspension of withdrawals… adding he was also bemused that customers “don’t demand transparency about key management.”

Incidents like this have arguably contributed to the rise of decentralized exchanges, given how they are perceived to be less susceptible to a single point of failure.

OKEx’s tweet announcing the resumption of crypto withdrawals didn’t necessarily have the desired effect.

One user wrote: “Thanks but no thanks. I can’t afford to have another withdrawal suspension.”

Another added: “Thank god, never going to trade here again.”

Others tried to put a positive spin on things. Since Oct. 16, Bitcoin has risen from $11,300 to $17,800—a jump of 57%—meaning many users will have seen the value of their crypto jump while withdrawals were unavailable.

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Connor Sephton is a journalist with an interest in cryptocurrencies, personal finance, and financial inclusion—as well as the challenges the crypto industry faces in achieving mainstream adoption. He owns cryptocurrencies.