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OKEx Incident Could Push More Crypto Users to Defi Protocols

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Quick take:

  • OKEx has halted all crypto withdrawals
  • One of the exchange’s private key holders is currently with authorities regarding an investigation
  • Crypto outflows from OKEx are at zero
  • The current incident is a reminder to crypto users that storing funds in CEXs is risky because they don’t own their private keys
  • DeFi could benefit as a result of the OKEx incident

The crypto-verse has been hit hard by the news of OKEx halting all withdrawals after one of its private key holders is cooperating with Chinese authorities regarding an investigation. According to the official announcement by OKEx, the concerned individual cannot be reached.

One of our private key holders is currently cooperating with a public security bureau in investigations where required.

We have been out of touch with the concerned private key holder.  As such, the associated authorization [of withdrawals] could not be completed.

Bitcoin, Ethereum and the entire Crypto Markets Shaken

A quick glance at Coinmarketcap reveals that total crypto market capitalization has dropped by approximately $1o Billion since news broke of the incident at OKEx. Bitcoin dropped from the $11,500 price level to the $11,200 support area as the OKEx news hit the internet. Ethereum also dropped hard from the $380 price level to the $365 support area.

The OKEx Incident Could Push Crypto Users to DeFi

According to data from CryptoQuant.com, OKEx crypto outflows currently stand at zero. The team further provided a chart illustrating the situation at OKEx which can be found in the tweet below.

#OKEX outflow became zero after suspending withdrawals. $BTC plunged sharply right after the OKEX's announcement. pic.twitter.com/Z0hSgpAl6s

— CryptoQuant.com (@cryptoquant_com) October 16, 2020

With crypto traders unable to withdraw their funds, the stage is set for DeFi protocols to indirectly or directly plead their case in the sense that they are governed by community members and that users retain ownership of their private keys.

This fact has been demonstrated by the value of the UniSwap (UNI) token exhibiting a positive spike once news broke of withdrawals being suspended at OKEx. This event was captured by numerous crypto community members as seen in the following tweet that retweets another crypto community member’s observation.

BREAKING: Cryptocurrency investors flock to $UNI as they realize it's a safe haven against centralized exchanges. #DeFi has seen a surge of inflows with some DEXes surpassing Coinbase in volume. https://t.co/fwkedgL43V

— Akado 👨‍🌾🌽 (@AkadoSang) October 16, 2020

CEXs Experiencing Issues is Bullish for DeFi

Only a few days ago, KuCoin was hacked and over $280 Million in crypto stolen. However, a majority of this amount was recovered through the collaboration with other crypto exchanges and crypto projects that managed to freeze the stolen funds on the blockchain. The KuCoin hack, coupled with the current situation at OKEx, led @CryptoMessiah to conclude that all these events are bullish for DeFi. His comments can be found in the following screenshot.

Screenshot courtesy of Twitter.

   

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