CEO Global Exchange Halts Withdrawals As Founder Is Detained In China
Hong Kong-based cryptocurrency exchange, CEO Global has halted withdrawals by customers amidst ongoing investigations in China. In what appears to be similar to the case of OKEx, one of the core founders of CEO global has been under detention, linked to the crackdown on fraudulent SIM card and bank account fraud investigations by the Chinese authorities.
CEO Global claims inability to effect withdrawals as the reason for the above mentioned withdrawal suspension. According to the exchange, the detained founder is in custody of the private keys of most of their cold wallets. Hence, inability to have access to him means that withdrawals cannot be processed.
CEO Global notes;
Affected by the ongoing national crackdown on fraudulent SIM cards and bank accounts, the bank account of one of our core founders has received illicit money from international fraudsters and scammers.
The above statement perhaps explains the reason why the founder was taken in for investigation by the authorities.
Until November 27, 2020, OKEx cryptocurrency exchange suspended all withdrawals for about one month due to similar circumstances. The impact of the withdrawal suspension was felt among customers and other cryptocurrency users within the region.
Shortly after the withdrawal suspension was lifted, some of the big investors in OKEx were observed to move significant parts of their assets out of the platform. As a matter of fact, a number of them were quite vocal about their decision to do so. This is despite the bonuses and bounty programs that the exchange promised its users on their return. Indeed, some of the users suggested that the exchange should have the capacity to accommodate such setbacks without a disruption of service. There is the possibility that some users of CEO Global crypto exchange may think likewise.
Issues like this do not just roll by without leaving some impact on the exchange, and sometimes the industry as a whole. On November 17, 2020, it was reported on 8BTC how the crackdown on OKEx should be a warning sign to other crypto exchanges, especially within the Chinese region. Perhaps, the crackdown on CEO Global could be a classic example of this prediction. Maybe other cryptocurrency exchanges in the region will begin to take measures that will prepare them against falling into such disruption, in case they become affected by the crackdown.
The government of China has not relented in its fight against fraudulent financial activities in the region. The pseudo anonymous nature of cryptocurrencies makes it an attraction for people involved in fraud, hence the special focus of the authorities on the industry.
Currently, cases of fraudulent SIM cards and bank accounts scam appear to be on the rise in China. In an attempt not to disclose their identities, many people would rather opt for existing SIM cards or bank accounts held in the names of other people to effect transactions.
In about 2 weeks of police investigation, over 4,600 people have been arrested, and about 65,000 bank cards confiscated. Also, more than 15,000 people have been barred from opening bank accounts in the next 5 years as the nationwide crackdown continues.
Investigations are still ongoing and CEO Global says it has no idea when the police will release its founder. Hence, there is no timetable yet as to when the suspension on withdrawals will be lifted. Apart from this suspension, the exchange is also closing its Over-The-Counter (OTC) services, suspecting that the Chinese authorities may extend the crackdown to affect that service as well.