Star Xu, the founder of the world’s second largest crypto exchange OKEx and exchange service provider OKCoin, has been reportedly released from custody after being arrested by the Shanghai police on the evening of Sept. 10. According to reports circulating in the Chinese media, Xu’s arrest came in the wake of an ongoing investigation for a cryptocurrency scam not directly linked to either of the exchanges he founded.
Insufficient Evidence Led to Xu’s Release
Local news outlet Sina News claims that Xu was brought in for questioning over his alleged involvement in a fraudulent scheme related to WFEE coin, of which the OKCoin founder and CEO is a shareholder. He was held at the Shanghai Weifang Xincum police station for questioning.
According to the outlet, while Xu owns a business in Shanghai, it has nothing to do with OKEx or OKCoin for that matter. With that legal complication in mind, the Shanghai police originally planned on transferring Xu’s custody to their counterparts in Beijing, where the requisite jurisdiction for the charges levied exists.
However, in order to hand him over to Beijing authorities, the Shanghai law enforcement authorities were legally required to find sufficient evidence supporting Xu’s involvement in the scam within 24 hours of the initial apprehension. In the absence of sufficient cause for an extended custody, Xu would be legally entitled to walk free, which is exactly what seems to have happened. (Blokt is unable to independently verify the authenticity of the report about Xu’s release at the moment.)
OKEx, OKCoin Users Need Not Fear (for Now, at Least)
Xu was questioned for his alleged involvement in a suspected initial coin offering (ICO) fraud linked to a token called WFEE. Per the allegations, OKEx issued and sold the WFEE coins on its website, and as the owner of OKEx and a shareholder of WFEE, Xu is believed to be one of the main suspects in the ongoing investigations.
The OKEx website described WFEE as “the world’s first WiFi sharing eco-system based on blockchain technology designed for the globe.” The ICO appears to be in the presale phase without a confirmed (or even tentative) timeline for a public sale.
However, based on the current direction of the case, it doesn’t appear that there is imminent danger of the ongoing investigation spilling over to affect OKEx and OKCoin customers.
