The Founder, Star Xu, of the second largest cryptocurrency exchange, OKEx, have been arrested on the 10th of September by the Shanghai police, according to Sina News.

Since OKEx is the second largest cryptocurrency exchange after Binance by trading volume, according to Coinmarketcap.com, it has been a hot topic in the news during the past months. A few months ago the exchange announced that they had teamed up with the Malta Stock Exchange (MSX) for the development of a brand new platform for trading security tokens which was exciting news.

A while back they ran into trouble, as a massive failed bet on bitcoin futures has left an unknown trader unable to cover the losses and threatening to destabilize one of the crypto industry stalwarts. Following the incident, OKEx implemented an anti-manipulation policy that came into effect on August 4th in a bid to prevent similar incidents from re-occurring.

Even though OKEx is the second largest exchange by volume, a fairly recent study showed that many exchanges volume is faked. On August 26, the Blockchain Transparency Institute (BTI) published a report claiming that the manipulation is not over and that the global exchanges are faking $6 billion of its daily volume. Investors have to be careful and not take the volume as an insurance that the exchanges are safe and secure. Investors have to do their due diligence when it comes to cryptocurrencies.

However, OKEx is an exchange with a good reputation, but the most recent news is certainly anything but good. According to the local news outlet, Sina News, Xu is currently being held in the police station and might be released within 24 hours if insufficient evidence is found of his participation in the fraud. They stated on Twitter:

“Sina News: Star Xu, the founder of OKCoin/OKEX, is being investigated by Shanghai police. According to Lu Jun, an officer at the local PD, Xu was suspected of fraud accused by investors. SH police have accepted the case, and Star Xu is still at the police station under investigation. If there is no sufficient evidence, he will be released after 24 hours”.

The news outlet Zerohedge reports that Xu is charged with being involved in a fraudulent scheme regarding WFEE Coin. As Xu is a shareholder in this potentially fraudulent company, he was “put through a round of questioning to get to the bottom of these rumors.” The company issued tokens and sold them through their webiste and as a shareholder, Xu can be held responsible for any kind of fraud related to the company.

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