Why bitcoin price suddenly fell by 3% in 30 minutes on OKX freeze

OKEx, one of the world’s largest cryptocurrency exchanges, announced a temporary suspension of withdrawals on 16 October. On this news, the price of bitcoin (BTC) suddenly fell to 3% on major exchanges in 30 minutes.

The nervous return to the market comes from the reason behind the suspension and carries the potential impact.

Bitcoin’s 15-minute price chart. Source: TradingView.com

OKEx says a private key holder is cooperating with investigators, bitcoin falls sharply

The OKEx team said one of the private key holders of the exchange is cooperating with a Public Safety Bureau in the investigation. The team said:

“One of our private key holders is currently collaborating with a Public Safety Bureau in investigations where necessary. We have been out of touch with the respective private key holder. As such, the associated authority could not be fulfilled. 8.1 For changes in service and interruptions of service, OKEx may change the service and / or interrupt, suspend or terminate the service at any time with or without prior notice. “

Soon after the release of the OKX statement, bitcoin prices fell from $ 11,514 to $ 11,190. The 3% drop occurred within a 30-minute period, leading to a broader boom in the market.

Bitcoin exchanges typically implement a multi-signature system to implement the process of withdrawal from cold storage, i.e. a wallet that is not connected to the Internet.

To transfer funds from a cold wallet, the exchange often distributes several private keys to owners and executives. In a multi-signature system for signing transactions, all or most of the key holders must be present.

In the case of OKEx, the exchange stated that one of the private key holders was not able to approve the withdrawal. OKX CEO Jay Hao said:

“All operations, except digital asset / cryptocurrency withdrawals, remain unaffected @ OKX. All your funds and assets are safe. The investigation only concerns the personal issue of a certain private key holder. Further announcements will be made. “

The price of bitcoin fell sharply on OKX News for two main reasons. First, OKEx is a major exchange that processes a substantial amount of both spot and future volumes.

Second, when it concerns exchange of relations with China, market speculation usually increases. Lal Lee, co-founder of 8BTC said:

“OKEx said the first withdrawal would be suspended at 15PM, but would soon be changed to 11AM. Rumor has it that some ‘exchanges have more than 800 accidents associated with cross-border money laundering. “

Industry officials were surprised by the news

The president of Hong Kong’s The Bitcoin Association, Leo Wes, said he was surprised by the fact that one person could affect the entire cold storage multi-cig system of the exchange. She wrote:

“That one person sitting in China holding the keys to the entire offshore cryptocurrency exchange is probably the most amazing thing about the industry that I learned this year. However, customers do not demand transparency about key management, although one comes close to the other. “

In the case of Bitmax, as an example, when the firm’s CTO Samuel Reid was arrested earlier this month, most private key holders were able to sign the transaction.

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