Another Asian Crypto Exchange Suspends Withdrawals as China Detains One of Its Founders

Chinese authorities are launching a national crackdown against fraudulent SIM card and bank account schemes. The latest detained under this operation is one of the founders of a Hong Kong-based cryptocurrency exchange CEO Global (ceobi).

Crypto Exchange Founder Taken Into Custody by Chinese Police Amid Nationwide Crackdown

According to an announcement published by CEO Global, one of its founders had been taken under custody by China’s authorities in the midst of an ongoing investigation that involves alleged participation in a fraudulent bank account and SIM card scheme. The statement says:

Affected by the ongoing national crackdown on fraudulent SIM cards and bank accounts, the bank account of one of our core founders has received illicit money from international fraudsters and scammers.

The unnamed founder has been taken away for 15 days to pursue the investigation, the exchange said. However, they don’t have any clue on when the police will release him.

But CEO Global did not make this public by chance, as the exchange noted the founder holds the private keys to most of the platform’s cold wallets, forcing them to halt all the withdrawal requests upon further notice.

They cited its inability to process all the withdrawals from the crypto held in the hot wallets. This situation also forced Hong Kong-based crypto exchange to close all its over-the-counter (OTC) trading services, citing “uncertainties” surrounding Chinese authorities’ future crackdown.

A similar situation happened with the crypto exchange Okex, which disabled withdrawals on October 16, 2020, following the detainment of its founder, Mingxing “Star” Xu. However, as of press time, Okex’s withdrawals have been running since it was re-enabled on November 26, 2020.

Fraudulent SIM Cards, Bank Accounts Schemes Popular Among Crypto Scammers

Rising SIM cards and bank account scams cases in China have been raising concerns among authorities.

Locals who are unwilling to disclose their identities when acquiring a new SIM card or opening a new bank account opt for existing ones owned by other people, often leading to strengthening an industry that trades with accounts obtained via identity theft.

Such maneuverer has led to fraudsters seeking such services to pursue crypto-related scams. According to the latest figures, the Chinese police have arrested over 4,600 people and confiscated about 65,000 bank cards in two weeks since the start of the nationwide crackdown.