- OKX under EU investigation after Bybit claims hackers laundered $100M via Web3.
- OKX denies EU probe, says it froze funds and blocked hackers’ addresses after Bybit hack.
- EU regulators debate if MiCA rules should apply to OKX’s Web3 service amid concerns.
Crypto exchange OKX has publicly denied claims that its platform is under investigation by European regulatory bodies. OKX denied the claims of investigation following Bloomberg’s reporting that authorities scrutinized its Web3 wallet services for laundered funds linked to the $1.5 billion Bybit exchange breach.
EU Regulators Assess Web3 Compliance Under MiCA
Bloomberg’s March 11 report detailed how European regulators were allegedly investigating OKX’s Web3 service. The report claimed that hackers linked to the North Korean Lazarus Group had used OKX’s platform to launder approximately $100 million in funds stolen from Bybit. According to the sources cited by Bloomberg, the European Securities and Markets Authority (ESMA) and national regulators from Austria and Croatia were considering whether OKX’s Web3 platform should fall under the EU’s Markets in Crypto-Assets (MiCA) regulations.
However, OKX responded swiftly, calling the report misleading. The exchange stated it was not under investigation and rejected the claims that its platform was involved in illicit activities. OKX emphasized its commitment to helping Bybit track and implement security measures to block the hackers’ addresses and froze associated funds moving into its platform.
The crypto exchange stated that its wallet service operates as an aggregator through its swap function and self-custody wallet service, enabling user efficiency. After the Bybit hack, the company claims it took action by freezing brokered exchange funds on its centralized exchange (CEX) and developing system functionality to identify and prevent hackers’ access to decentralized exchange (DEX) and wallet services.
National authorities from Croatia and Austria claim that OKX should follow EU financial requirements for Web3 services because these services merge with their centralized trading platform. Some stakeholders proposed that MiCA should not control decentralized services, while others advocated for MiCA to extend its authority to all services. Malta, which previously granted the crypto exchange a MiCA pre-authorization, is also reviewing whether the exchange remains compliant.
Crypto exchange OKX Rejects Money Laundering Allegations
Bybit CEO Ben Zhou previously alleged that hackers laundered approximately $100 million through OKX’s Web3 wallet service following the exploit on Bybit’s platform. In its response, OKX also refuted accusations from Bybit that it had been complicit in laundering stolen funds.
In a social media statement, OKX Global Chief Marketing Officer Haider Rafique reaffirmed that the company has been transparent with regulators and does not facilitate illicit activities. He described any suggestion that the Crypto exchange was complicit in laundering stolen funds as “preposterous.”
The exchange asserted that Bybit’s statements were spreading misinformation about their role in the security vulnerability. OKX stated that the ongoing security issues and vulnerabilities were due to Bybit’s lack of security measures and not any failure on the crypto exchange’s part. The company clarified that its platform had reacted by freezing the funds involved in the hack and developing new features to block hackers’ addresses from accessing its services.
Bybit’s CEO Ben Zhou reported that over $200 million of the $1.46 billion stolen from the exchange has become untraceable due to the use of mixing services. About 20% of the stolen money was obtained from Ethereum through THORChain before being converted into Bitcoin despite the platform receiving criticism for failing to stop DPRK-backed hackers. Zhou reported that 77% of the stolen digital currencies can still be tracked across multiple platforms despite recent losses of the total stolen funds.