The Chinese cryptocurrency exchange CEO Global has suspended the input and output of cryptoassets for an indefinite period due to the arrest of the founder of the trading platform.
The journalist Colin Wu reported on Twitter that the bank card of the founder of the exchange has repeatedly received “underground” funds that are hidden from taxation. Upon learning of this, local authorities detained the head of CEO Global for 15 days to conduct an investigation.
According to the exchange, the detainee had most of the private keys from the cold wallet, since at the current stage hot wallets do not meet the needs of users withdrawing digital assets.
Chinese regulators have begun to pay increased attention to cryptocurrency exchanges and over-the-counter (OTC) platforms to prevent illegal activities and money laundering through cryptocurrencies. For example, in June, the police began to freeze the accounts of Chinese OTC traders.
Wu previously reported that due to government pressure on the OTC market, more than half of local miners are unable to pay their electricity bills. Given the current state of affairs, many of CEO Global’s clients have suspicions that the exchange is hiding behind the actions of the Chinese authorities to cover up the theft of funds.
Wu noted that the statement by CEO Global resembles the situation with the OKEx platform, which on October 16 also announced the suspension of withdrawal of funds due to the loss of communication with one of the holders of private keys. He was absent due to an investigation by Chinese law enforcement agencies.
The exchange specialists said that in the future, to authorize transactions, they will take into account scenarios when the owners of private keys become unavailable due to unforeseen circumstances. On November 26, the exchange resumed the withdrawal of cryptoassets, and also launched a loyalty program for users.
