- BCH futures contracts worth $135 million abruptly closed by OKEx citing increased market volatility
- OKEx has apologized to clients, claiming it acted in their best interest
- Investors are threatening to boycott the cryptocurrency trading venue, with one trader already filing a complaint against the firm
OKEx, a Hong Kong-based digital assets exchange has been criticized by bitcoin cash (BCH) futures contracts investors for suddenly closing their positions before the BCH hard fork could complete, reported Bloomberg on November 19, 2018.
OKEx Exchange Incurs Investor’s Wrath
OKEx, the Hong Kong-based subsidiary of the Star Xu-led cryptocurrency exchange OKCoin, has been condemned by some of its clients after it’s early closure of bitcoin cash futures contracts on November 14, made them experience substantial losses.
Per Bloomberg, OKEx exchange, which currently supports more than 500 digital assets, changed the terms of $135 million worth of bitcoin cash (BCH) futures contracts on November 14, 2018, without first informing traders, leading to even more losses for some investors.
One of the affected investors, Qiao Changhe, a former energy futures trader who now owns Consensus Technologies IT consultancy firm, claims to have lost a whopping $700,000 due to the incident and has threatened to drastically reduce his $5 million fund’s use of the exchange.
“OKEx is losing its credibility. The futures contract became something nonsense, not something we could use to hedge,” lamented Qiao.
That’s not all, four other traders who reportedly pleaded anonymity with Bloomberg, have also made it clear that they will scale back their use of the firm or even boycott OKEx entirely and one of the investors have already reported the matter to Hong Kong’s financial watchdog, the Securities and Exchange Commission (SFC).
Too Late For Apologies? Unending Controversies
Shortly after prematurely delivering the BCH futures contracts, OKEx explained the reasons for making such a controversial decision in its statement titled: “Explanation of the Early Delivery of BCH Futures Contracts.”
In the statement, OKEx claimed it had to quickly close all open bitcoin cash futures contracts positions due to “Strong volatility observed in the BCH spot and futures markets,” triggered by the impending November 15, BCH hard fork.
In response to why it failed to inform investors beforehand, OKEx said that an early announcement “may make room for market manipulation and cause more losses to clients.”
It’s worth noting that OKEx, the world’s second largest cryptocurrency exchange has been the subject of several controversies in the crypto-space in recent times.
On September 4, 2018, Blockchain Reporter informed that a research result released by the Blockchain Transparency Institute had revealed that OKEx is one of the exchanges that fake their trading volumes.
On September 12, 2018, reports emerged that OKEx founder Xu Mingxing was being investigated for his involvement with a crypto scam firm called WFEECoin.
