OKEx Founder Arrested by Shanghai Police

 In Exchanges, Governments and Regulations

The CEO of the world’s second largest crypto exchange has been taken to the Shanghai Police department over alleged investment fraud.

On Tuesday, September 11, local Chinese media Sina News reported that Star Xu, the CEO and founder of cryptocurrency exchanges OKCoin and OKEx, has been detained in Shanghai and taken to the local police department for investigation over an alleged fraud case.

It’s worth mentioning that the situation is still rather unclear. According to Sina News and subsequent English translations, Star Xu was questioned by investigators in regard to his potential involvement in fraudulent activity by WFEE Coin, since he is one of the company’s shareholders.

However, while some media sources claim Xu was arrested and held in custody, others report he was just assisting Shanghai police in the investigation of the crypto fraud. Whatever, photographs of Xu at the police station posted in social media did not suggest that he was put under any legal restraint.

https://twitter.com/cnLedger/status/1039472962296926210

As for WFEE, the company issued and sold on the website its native tokens, which have been claimed by investors as a potential scam. The increasing number of complaints led the Shanghai police to accept the case and start an official investigation of the matter. Xu, as a shareholder of WFEE, might have been involved into this fraudulent investment scheme.

Related Article:  Japanese Regulated Exchange Zaif Hacked – Nearly 6000 BTC Stolen

Still, it should be noted that the WFEE team, including Xu, is Shanghai-based, while the company’s unit accused of issuing the scam coins is located in Beijing. Thus, Xu might have had no involvement with any illegal activity performed in Beijing.

It was initially known that the maximum custody limit was 24 hours, so if there was no sufficient evidence found, Xu was expected to be released on September 11, at 10 pm local time. Indeed, according to most recent cnLedger post on Twitter, he was released from Shanghai police at 9:30pm.

https://twitter.com/cnLedger/status/1039523921563803654

At the moment, it is still unclear if Xu has anything to do with the scam, but it is obvious that the news might have a significant adverse effect on the OKEx.

Cryptocurrency-related scams are nothing new. Previously, we reported that Indian police detained a former politician due to his alleged engagement in the BitConnect scam.

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