OKX Founder Defends Account Freezing Policy After User Buys KYC Accounts

Freezing of $40,000 in Stablecoins

The founder and CEO of OKX, Star Xu, has defended the platform's policy of freezing assets after a user alleged the cryptocurrency exchange blocked $40,000 in stablecoins. These funds were reportedly held in purchased accounts, which were not registered under the user's name. The user, known on social media as Captain Bunny, claimed that OKX froze these funds after activating risk controls linked to four accounts.

The user mentioned that the funds were necessary to cover medical expenses for their elderly father. They admitted that the accounts were purchased at the end of 2023 and were initially verified under other individuals' names, a common practice to circumvent restrictions imposed on users from mainland China.

Xu's Justifications for the Exchange's Policies

Star Xu responded to critics on the social media platform X, stating that transferring account control to someone other than the verified holder represents a serious "neglect of responsibility for the security of user assets and the platform." Xu emphasized that OKX requires all users to operate on the platform with real identity verification.

Despite the fact that purchasing verified accounts exists in a legal gray area, Xu noted that the platform might assist in unlocking the user's assets, provided they meet three criteria. Firstly, individuals who sold the KYC account must explicitly "decline" ownership of the funds. Secondly, the accounts must be free from legal freezes and investigations by law enforcement. Lastly, the accounts should provide "verifiable" evidence of the sources of funds that comply with regulatory requirements.

KYC Policies and User Reactions

Cryptocurrency exchanges have implemented KYC (Know Your Customer) policies to comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations, thus ensuring legal operation and user safety. New users are required to provide personal information and verification through documents and selfies to be approved for trading on the most trusted platforms.

The majority of cryptocurrency investors have expressed support for the exchange's policies, even if it means keeping purchased accounts frozen. "Basically, no exchange platform will open such a backdoor; once they do, the consequences would be unimaginable! In the future, there will be people who will rely on this to commit fraud," commented a cryptocurrency investor.