By
Mayowa Adebajo
March 1st, 2024
Following multiple complaints from WFee coin investors, the founder of one of the world’s largest crypto exchanges was taken to the Shanghai police for criminal investigation.
The founder and CEO of the Chinese cryptocurrency exchanges OKEx and OKCoin, Xu Mingxing, also known as Star Xu, has been arrested in Shanghai on suspicion of fraud, China’s local news outlet Sina News reported on Tuesday.
The accusations relate to Xu’s involvement in a possibly fraudulent digital currency project called WFee, where he is a shareholder. According to the Shanghai authorities, they received a lot of complaints from WFee investors who suspect the founders of operating fraudulent schemes.
“WFEEx is an innovative digital asset trading platform based on blockchain technology, and WFee is the only platform currency on the WFEEx exchange,” the project’s website reads. “Holders of WFee coins can participate in trading mining, voting on the currency, exchanges and other airdrops, and can also apply to become a WFee professional investor.”
cnLedger, a Chinese cryptocurrency and blockchain news platform, reported that after questioning at the police, Xu’s Shanghai company was found not connected to the fraud. Besides, the report says the possible scam was conducted in Beijing.
Sina News: Star Xu, founder of OKCoin/OKEX, is being investigated by Shanghai police. According to Lu Jun, officer at the local PD, Xu was suspected of fraud accused by investors. SH police has accepted the case.
Source (in CN): https://t.co/Y6fIt8Sz49https://t.co/ItVfMZ8ZoD pic.twitter.com/Gquv9n7iKs
— cnLedger (@cnLedger) September 11, 2018
As for now, Xu is not under arrest as he has been released by the police due to the lack of evidence proving his connection to the project. The Shanghai authorities will handle all the documents related to the investigation to the Beijing police, but it is unknown at the moment whether he will be charged or detained by the authorities in Beijing.
OKEx is the world’s second biggest cryptocurrency exchange by trading volume, processing about $700 million in digital currency per day. Following the news of Xu’s arrest, the exchange witnessed almost a 3% decline in trading volume.
This is not the first time Xu’s companies are suspected of shady practices. A few weeks ago, after a forced liquidation event on OKEx, Xu was accused of manipulating the markets, with traders claiming it led to an immediate decline of bitcoin’s price.
Earlier this year, the analyst Sylvian Ribes claimed that up to 93% of the platform’s trading volume is completely fabricated. If users wanted to liquidate $50k in assets, it would cost them 10% in slippage on pairs with up to $5 million volumes. These pairs include NEO/BTC, IOTA/USD and QTUM/USD which are hardly illiquid or low-profile assets. If compared to the same crypto assets on other exchanges, this slippage is too high, he claims.
However, the platform continues to grow and hit a new record of $5.7 billion this July, thus showing a surge of 97%. In June, the company’s trading volume amounted to $2.9 billion.