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OKEx founder reportedly under investigation as exchange suspends withdrawals

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The founder of major global cryptocurrency exchange OKEx has been reportedly questioned by authorities previous to OKEx suspending cryptocurrency withdrawals.

OKEx founder Mingxing Xu, also known as Star Xu, has reportedly been questioned by the police, Chinese news agency Caixin reported today. According to the report, the executive was investigated “at least a week ago” and has also been absent from work for some time.

When approached for comment on Xu’s participation in a police inquiry, OKEx told Cointelegraph that the exchange is no longer affiliated with OK Group, where Xu is a senior executive, and therefore was not in a position to comment on his activities. 

The news comes shortly after OKEx suspended withdrawals of crypto assets on its platform today. According to the exchange, OKEx’s private key holders are cooperating with a public security bureau in an ongoing investigation. The exchange told Cointelegraph:

“We are unable to disclose the nature of an ongoing investigation but would like to assure all OKEx users that their funds are safe and that all other functions on OKEx are unaffected.”

OKEx CEO Jay Hao said that the decision to temporarily suspend withdrawals was taken “with user security in mind,” stating: 

“As a world-leading exchange, user security is not something that OKEx can or will ever compromise on. We will do everything in our power to reinstate this service promptly and will provide updates on the matter as soon as possible.”



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.