The sudden five-week-long suspension of OKEx’s crypto withdrawal service has left a lot of its customers, largely primarily based in China, dissatisfied and decided to depart or scale back holdings on the trade when withdrawals resume someday this week.
“We’ll nonetheless commerce on OKEx however our funding can be way more diversified and [we] will scale back our place on OKEx to about one-third of our earlier one,” Alex Zuo, vp of China-based crypto pockets Cobo, advised CoinDesk by way of WeChat. “Although we predict OKEx continues to be a trusted trade, there can be many uncertainties sooner or later.”
That dedication has change into even stronger after the Malta-based crypto trade introduced it can launch a mixture of compensation and reward applications for customers who’ve used its service throughout the suspension interval.
“If OKEx certainly has sufficient belongings to organize a state of affairs the place bulk withdrawals happen, it will be a better transfer in the event that they advised customers ‘go forward and withdraw your tokens. We’ll assure you’ll obtain your tokens instantly,’” Daniel Wang, founder and chief govt of decentralized token trade protocol Loopring, advised CoinDesk in a telephone name.
Learn extra: OKEx’s Withdrawal Suspension Isn’t Behind Bitcoin’s Rally: Analysts
“Launching compensation and reward applications doesn’t sound fairly spectacular as their advertising technique to preserve their upset customers,” Wang added.
OKEx unexpectedly introduced on Oct. 16 it suspended all cryptocurrency withdrawals on its platform, saying one among its key holders had “been out of contact” with the trade as a result of he was “cooperating with a public safety bureau in investigations.”
Nonetheless, open curiosity for each bitcoin futures and choices has remained excessive on OKEx. It nonetheless maintains its main place because the main by-product crypto trade with the very best bitcoin futures open curiosity, at $1.27 billion, in keeping with knowledge supply Skew.
With out specifying an actual date for resuming withdrawals, the trade is getting ready to reopen the service someday this week. However this vagueness has raised questions as to why the date has not been disclosed.
Though “much less seemingly,” a few of OKEx’s bigger, or “whale,” shoppers might be able to manipulate the trade’s market proper earlier than or after the withdrawal opening for “arbitrage alternatives” in the event that they be taught the precise date earlier than anybody else, Ki Younger Ju, chief govt officer at crypto knowledge supply CryptoQuant, advised CoinDesk.
Different eventualities embrace one the place some whales who intend to depart OKEx might convert their bitcoins to different cryptocurrencies for a variety of causes together with quicker transactions, in keeping with Ki. Or some hedge funds might ship bitcoin or tether to OKEx for arbitrage alternatives.
The higher state of affairs from the attitude of bitcoin’s worth could be for a considerable amount of bitcoin to movement from OKEx into non-exchange wallets, bringing much less provide on exchanges basically, Ki stated. Often, extra bitcoin on exchanges is considered as a bearish signal as a result of it’s seen as rising promoting strain.
A possible risk is that extra customers in China might contemplate sending their bitcoins to personal wallets as a result of their choices are restricted in the case of exchanges.
Learn extra: Crypto Lengthy & Quick: The OKEx Drama Exposes a Weak spot in Crypto Market Infrastructure
Crypto exchanges have largely been working in a grey space ever since China’s authorities banned crypto buying and selling in 2017, Wang stated. Chinese language crypto holders have primarily been counting on the “Huge Three” exchanges – Binance, Huobi and OKEx – that began in China initially with excessive buying and selling volumes and comparatively good reputations.
Huobi and OKEx have each boasted of their shut relationships with the Chinese language authorities. Nonetheless, working their trade enterprise in a grey space implies that shut ties with the federal government doesn’t assure the security of the exchanges’ customers’ funds in China, as evidenced by OKEx’s scenario.
“We imagine that after this incident, the buying and selling volumes on OKEx will decline considerably and establishments will even seemingly withdraw from it,” Cobo’s Zuo stated. “Huobi could have the identical potential dangers. Binance as nicely.”
Zuo advised CoinDesk his firm has began contemplating opening accounts on different exchanges together with FTX, Coinbase and Bitstamp, however it can take a very long time to shift these transaction volumes from the Chinese language Huge Three exchanges.
Flex Yang, founder and chief govt officer of Hong Kong-based crypto lender Babel Finance, stated that what stays engaging on the OKEx platform is a wide range of by-product merchandise, which can preserve a few of the extra seasoned merchants from leaving the main by-product crypto trade.
“In truth, we’ve got seen that some merchants have been buying and selling on OKEx regardless of the withdrawal suspension,” Yang stated. “It’s anticipated that customers which have been buying and selling some contracts provided on OKEx solely will return to OKEx quickly.”
