OKX CEO defends freezing $40,000 in stablecoins after user admits buying verified accounts

Star Xu, the CEO and founder of OKX, defended the exchange’s choice to freeze $40,000 worth of stablecoins after a user acknowledged purchasing verified accounts. Xu stressed that transferring account control is against platform rules and stringent KYC and AML responsibilities.

In a Sunday X post, the user, who goes by Captain Bunny on social media, stated that OKX froze approximately $40,000 worth of Global Dollar (USDG) stablecoins after activating risk controls connected to four accounts. According to the user, the money was required to pay for his father’s medical bills.

The user admitted that the accounts were purchased in late 2023 and were initially validated under the names of other individuals, a tactic frequently employed to circumvent limitations on users in mainland China.

The user claimed that OKX’s security mechanisms eventually required facial recognition to access the accounts. Unfortunately, the user was unable to complete the verification process because the accounts were validated under separate identities.

Star says account buying breaches KYC, triggers asset freezes

After the complaint, Star Xu defended the exchange’s account freezing practices in an X response on Monday.  Xu said that if the exchange disregarded account registration identity information, it would be a serious breach of OKX’s obligation to safeguard user assets. He went on to say that platform responsibility would be compromised if account control was transferred to someone else based just on emotional appeals or personal claims on social media.

“Imagine this scenario: If you purchase someone else’s account, and the original account holder subsequently provides valid and complete identity information such as proof of identity, clearly claims ownership of the account, and requests the platform to reset account login and withdrawal permissions.” Star wrote on X in response to the user.

Star went on by phrasing a question. In this situation, should OKX put its trust in the person who can demonstrate the identity of the account or in the person who can’t provide any identity information and only makes personal claims?

OKX CEO explained that OKX mandates all users to utilize the platform with real-name verification to protect the asset security of platform users and comply with legal regulatory requirements, such as anti-money laundering and anti-fraud measures. He cautioned that buying and selling accounts is a clear violation of the OKX platform service agreement. 

Star further announced that the platform will activate facial recognition and other identity verification methods in various risk circumstances to stop such infractions and abusive behavior. In compliance with applicable laws and regulations, the platform will implement risk control measures, such as account freezing, when anomalous usage or suspicious account buying and selling conduct is identified.

OKX outlines strict conditions for asset clearance and account closure

Star said that even though purchasing verified accounts is illegal, the platform might nevertheless assist in clearing the user’s assets if he meets three requirements.

First, the sellers of the Know Your Customer (KYC)-passed accounts are required to “explicitly disclaim” possession of the money. Second, there must be no law enforcement inquiries or court freezes on the accounts. Finally, the accounts must offer “verifiable” evidence of funding sources that satisfy legal standards.

The platform will only be able to assist with asset clearance and account closure in compliance with the law and regulations if all three requirements are met simultaneously.

He confirmed that asset clearing and account closure won’t be allowed until the platform has finished a careful and comprehensive review. 

Crypto exchanges established  KYC to comply with Anti-Money Laundering (AML) and counter-terrorism financing (CTF) rules. This ensured legal operation and user safety.

In this case, new users must submit personal information, documentation, and a selfie to begin trading on the majority of exchanges. “Upon verification, the platform service is only for the account’s real-name verified individual. You previously stated that the account’s real-name information belongs to someone else,” OKX  said on Sunday in a response to the investor.

According to OKX’s help desk, OKX’s cryptocurrency services are only available to those who have completed KYC using their real identities.

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