What Is Okcoin?
Cryptocurrency trading is a relatively new market. This market gained prominence following the 2009 launch of Bitcoin, one of the world’s most popular and widely traded digital currencies. But unlike centralized exchanges, such as stock exchanges, cryptocurrencies trade on decentralized systems called blockchains. Trading can often be difficult to navigate, especially for new traders. And the market responded.
There is a host of digital currency-adjacent products and services that have become increasingly important as more investors are turning to cryptocurrencies as viable investments. Apps that make use of blockchain technology and mining-related products are two key examples. A third (and often overlooked) category is the digital asset trading platform. Okcoin is one of these platforms.
Okcoin is one of the largest cryptocurrency exchanges in the world. The system’s mission is to make cryptocurrency trading and investing easily accessible to anyone regardless of where they are. Despite its popularity and prominence, the system has come under increasing pressure from regulators in a number of countries. Keep reading to learn about the platform and some of the controversies surrounding it.
- Okcoin is one of the largest cryptocurrency exchanges in the world.
- The platform was established in 2013 in China by Star Xu.
- Based in San Francisco, Okcoin boasts more than 100,000 investors in 192 countries.
- Regulations for Okcoin and other crypto exchanges vary between jurisdictions, where some countries allow them to freely provide services to investors while others prohibit banks from accepting crypto transactions.
- The Chinese government
A Brief History of Okcoin
Okcoin is a private company that was founded in 2013 in China by Star Xu (pictured below). Xu has a background in technology management, including stints at Yahoo and Alibaba, in which he worked on developing search algorithms. He was also the chief technical officer (CTO) at DocIn.com, a file-sharing service.
The company is headquartered in San Francisco and has offices in Hong Kong, Malta, and Houston. It employs more than 100 people and has a presence in 192 countries. According to its website, Okcoin has more than 100,000 investors and traders who actively use the platform.
Since its inception, Okcoin has developed into one of the largest cryptocurrency exchanges in the world by user base and transaction volume. Users can trade Bitcoin and 20 other assets through the Okcoin. It has expanded beyond the traditional platform, allowing investors to trade over-the-counter (OTC) “without slippage.” The company also released a mobile consumer payment and lending app service, which is available on the Apple App Store and through Google Play.
Okcoin raised $10 million through two rounds of funding. The last round was completed on Dec. 15, 2017. The company has a total of five investors, notably venture capital firms from China.
Where Okcoin Trades
As noted above, trading is available to investors in 192 different countries. U.S. residents can access the platform through Okcoin USA, a money transmitter and registered money services business with U.S. Treasury Department. The trading service is restricted in the following states:
- New York
- West Virginia
- all U.S. territories
Although it is accessible in most countries, it is prohibited in those that are sanctioned by the U.S. (Cuba, Iran, North Korea, Crimea, Sudan, and Syria) as well as Bangladesh, Bolivia, Ecuador, Kyrgystan, and Malaysia.
Cryptocurrencies go public through initial coin offerings, the same way corporations do through initial public offerings.
Just like any other market, cryptocurrency market regulations vary between jurisdictions. These laws cover a number of issues, including:
- The market’s legality
- How cryptocurrencies are taxed
- The application of plans against money laundering, terrorism financing, and organized crime
Countries are divided into two different groups—those that freely allow cryptocurrency markets to exist and countries that prohibit financial institutions from participating in these markets. Iran and China are two countries that fall into the latter category.
Okcoin and China
Okcoin was deeply affected by the Chinese government’s crackdown on cryptocurrency exchanges. As a result, the platform halted trading for its local customers in 2013 and again in 2017. The market also suffered setbacks after federal authorities shut down trading after Black Wednesday in May 2021, which saw one of the largest sell-offs in the market. The government cited the rise in speculative trading related to virtual currencies as its rationale for the ban.
Okcoin also indicated that it would only halt yuan-based trading in cryptocurrencies. The news came shortly after China announced plans to ban all initial coin offerings. In response to the announcement, the price of bitcoin plummeted by about 20% in the span of roughly two weeks.
Okcoin continues to operate its cryptocurrency exchange for non-Chinese customers. It was widely speculated that a number of Chinese investors in the cryptocurrency space would turn toward overseas exchanges for their business. Okcoin was targeted because it was found to be operating without having appropriate Know Your Client (KYC) and anti-money laundering (AML) systems in place.
Despite its popularity, Okcoin has its fair share of controversies. Some of the most key issues that plagued the company since its inception are listed here.
Okcoin made headlines in 2014 and 2015 because of a controversy related to bitcoin.com, a domain it managed between 2014 and 2015. In May 2015, the exchange made public its ongoing dispute over the domain name and management rights thereof with Roger Ver (pictured), the well-known Bitcoin proponent and investor.
Ver claimed he owned the name and sued Okcoin for $570,000. Very also published an email history between himself and Okcoin’s management team. The emails reportedly showed that OKCoin failed to pay Ver for use of the domain name.
Okcoin offered a $20,000 reward to anyone who could demonstrably prove that Ver’s statements regarding the interactions were actually false. Ver responded by offering $1,000,000 to anyone who could validate the accuracy of a contract between the two parties.
Okcoin experienced another controversial moment in November 2017 when it briefly listed Bitcoin at a price of more than $15,000 per BTC, at a time when most other exchanges had the cryptocurrency priced around $7,000 per coin. The erratic readings from OKCoin’s system may have been linked to a brief outage in the exchange. The exchange’s “compliance and sanction controls” were also malfunctioning at the same time.
Arrest of Star Xu
Okcoin’s founder, Star Xu, was arrested by Chinese authorities in 2018 on fraud charges. The charges stemmed from claims that a number of investors ended up with large losses caused by a crash in the OKEx system—another platform created by Xu. He was released a day later after cooperating with the police.
Xu was also taken into custody in 2019 after police detained him while investing the possibility of a backdoor listing in Hong Kong of OK Group after he purchased a 60% stake in LEAP Holdings Group, a Hong Kong-based construction and engineering firm. Okcoin assured investors that all services remained intact on the exchange.
The Bottom Line
OKCoin’s quick rise to prominence within the cryptocurrency world has been met with a number of barriers, including controversies and regulatory issues. Nonetheless, the leaders of Okcoin have made clear their intentions to continue to provide their service in the best way they can. As a result, the exchange remains a popular international hub of cryptocurrency transactions.
Should Chinese authorities amend their regulatory stance toward cryptocurrency in the future, it’s likely that Okcoin will continue to be affected. However, if the past is any indication, Okcoin will likely adapt as best as it can to meet the new regulations in this case.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns cryptocurrencies.