TL;DR
- EU regulators investigate OKX’s Web3 tools after hackers laundered $100M from the $1.5B Bybit hack.
- The investigation examines if OKX violated the EU’s MiCA regulations, potentially risking its license.
- OKX denies wrongdoing, emphasizing cooperation with authorities and technical measures against illicit funds.
European regulators have placed cryptocurrency exchange OKX under scrutiny following revelations that its Web3 self-custody tools were allegedly used to launder around $100 million from the massive $1.5 billion hack of rival exchange Bybit. The February incident, attributed to North Korea’s infamous Lazarus Group, has triggered intense regulatory reviews across the European Union, potentially threatening OKX’s recently acquired MiCA (Markets in Crypto Assets) license.
Reports from Bloomberg detail that discussions held on March 6 by the European Securities and Markets Authority (ESMA) and regulators from the 27 EU member states specifically targeted the legitimacy of OKX’s decentralized platform under the current MiCA regulatory framework.
The MiCA Regulation Dilemma
MiCA, fully implemented late last year, includes exemptions for purely decentralized applications. However, Austrian and Croatian regulatory bodies argue that OKX’s services, including token swaps and decentralized wallet functionalities, are tightly integrated with centralized components and thus fall under MiCA oversight. This interpretation could place OKX in direct violation of EU financial laws.
In response, OKX publicly rejected claims of wrongdoing via its official X account, stating clearly that its Web3 wallet operates similarly to industry standards established by other platforms. The company highlighted its compliance measures, including real-time IP blocking and freezing suspicious transactions entering its centralized systems.
Connection to Bybit Hack
The unprecedented hack of Bybit, which resulted in the theft of predominantly Ethereum-based assets, marks the largest crypto theft recorded so far. Hackers allegedly utilized OKX’s non-custodial wallet and decentralized exchange features to obscure stolen funds.
Bybit CEO Ben Zhou accused OKX of facilitating the movement of illicitly obtained assets. However, OKX CEO Xu Mingxing strongly rebutted these allegations, underscoring the technological impossibility for exchanges to fully control user transactions on decentralized platforms. Mingxing criticized Bybit for misunderstanding fundamental blockchain principles, reiterating OKX’s active cooperation with law enforcement and Bybit’s investigative teams.
OKX President Hong Fang reinforced the exchange’s stance, emphasizing a commitment to rigorous compliance despite recent challenges, including last month’s $504 million settlement with U.S. authorities over unauthorized transactions.
As regulators deliberate, OKX’s European operational license hangs in the balance. The outcome will set critical precedents for future crypto regulatory enforcement within the EU.
