It was a dramatic week for China crypto. Okex, one of the largest crypto spot and derivatives exchanges, halted withdrawals with an ambiguous explanation of a police investigation involving their founder. The Filecoin mainnet launched on Thursday, then five of its largest miners went on strike two days later.
The world of blockchain moves fast, and nowhere does it move faster than China. Here’s what you need to know about China’s block-world in the week of Oct. 13-20.
The Okex drama
- Operations for Okex, one of the world’s largest cryptocurrency spot and derivatives exchanges, is facing major disruptions as Chinese authorities investigate its senior-level management.
- On Friday, Okex said that the exchange’s private key holders were unreachable because they were cooperating with a police investigation. Unable to authorize transactions, the exchange paused cryptocurrency withdrawals, but assured users that their funds were “safe and not affected.” (Okex press release)
- The exchange refused to give details on the investigation. Jay Hao, Okex CEO and co-founder, said on Weibo it was due to a “personal issue,” unrelated to the exchange.
- Right before the announcement, accounts affiliated with Okex withdrew large amounts of Bitcoin, Ethereum, and Tron coins. (Coindesk)
- Later on Friday, Caixin reported that founder Xu Mingxing, known as “Star,” had been arrested a week earlier and had not been seen in the company, citing two sources close to the exchange. (Caixin, in Chinese)
- Another report from a Chinese media outlet claimed that the investigation has to do with Ok Group’s backdoor Hong Kong listing in 2019. The report also said that authorities had released on bail another two executives who were arrested along with Xu. (Mars Finance)
- Xu was part of a fraud investigation by Shanghai authorities in 2018. (Sina Finance)
The Filecoin launch
- The much-anticipated mainnet of decentralized data storage network Filecoin launched on Thursday. Within a day, the price of Filecoin soared past $110, making it the third-largest cryptocurrency in the world by market capitalization.
- Chinese investors have been all-in on Filecoin since 2018. Chinese miners accounted for 80% of the mining power on the coin’s testnet.
- But on Saturday, five of Filecoin’s largest miners went on strike to protest the network’s economic model. Mining company Zhihu Cloud was operating only 276 out of its 8,000 mining machines on Saturday. (8btc, in Chinese)
- Under the Filecoin model, miners are required to stake coins as collateral before being allowed to mine. Rewards were released over a period of six months once a block is mined.
- In response to the protest, Filecoin changed its model to release 25% of the reward once a block had been mined. (Coindesk)
- Ticket platform Demai, an Alibaba subsidiary, will issue and sell tickets for the 2022 Asia Games in Hangzhou through blockchain, Chinese media reported. The organizers struck an agreement with the platform in hopes that blockchain technology will help battle counterfeits. (China News)
- One of China’s largest petroleum producers, Sinochem, unveiled a blockchain-based warehouse receipt system. (Ledger Insights)