Many OKEx users are taking to social media to express their feelings about withdrawals at exchange being suspended for nearly a week. The situation began on October 16, when OKEx announced that some of the top people at the company were under investigation by the Chinese police. OKEx began life in China, but moved to Malta when China made crypto illegal a few years ago. Although the exchange is no longer Chinese, many of the owners still live in China. There has been little information shared about the situation with clients, which appears to be creating uncertainty and frustration.
Why it matters: Centralized exchanges control vast amounts or crypto, which makes them a substantial force in the markets. The situation at OKEx shows how risky it can be to entrust tokens to a company that has no clear custodial agreements in place. In addition to the risk of loss to clients, these sorts of events could disrupt liquidity in the crypto markets. Unlike established markets, there is no central clearinghouse for trades, which open the markets up to liquidity-driven price swings that may exaggerate prices over the short term. Over the long term, these risks are likely to drive traders to decentralized exchanges that don't require the transfer of private keys to an exchange.