European Regulators Probe OKX Web3 Platform Over $1.5 Billion Hack and Potential Violation of Crypto Regulations
The hack involved North Korean hackers who laundered around $100 million worth of Ether through decentralized finance services. On March 6, European regulators held a meeting to determine if OKX's Web3 platform should fall under MiCA. Some regulators argued that because OKX controls its Web3 platform through OKX Singapore, it should be regulated by MiCA, despite the service being marketed as decentralized and self-custodial.
In response to the allegations, OKX denied any involvement in laundering the stolen funds. The company stated that it has been working with Bybit to track wallet addresses and block those associated with the breach. OKX also clarified that its Web3 service functions as a wallet aggregator and is designed to provide an enhanced user experience, maintaining that it is separate from its centralized exchange and not directly regulated by Singapore's central bank.
OKX operates its European hub in Malta, where it has been granted MiCA pre-authorization, allowing it to offer services across the European Economic Area. However, some regulators have raised concerns about this authorization, suggesting that it may need to be re-evaluated due to the hack. If the Web3 service is considered part of the centralized exchange, it could face more stringent regulatory oversight. This would likely impact other platforms operating similarly.
OKX CEO Star Xu has criticized Bybit's handling of the breach, stating that Bybit's own vulnerabilities led to the attack. He emphasized that Bybit's Web3 wallet and decentralized exchange were based on OKX's API. Despite this, OKX has insisted that it took immediate action to freeze the funds entering its centralized exchange and blocked the hacker's addresses from using its decentralized services.
Regulators are also investigating whether the attack violated sanctions on North Korea, given the suspected involvement of North Korean hackers. While no formal actions have been taken yet, regulators are preparing to take enforcement actions if necessary. The outcome of the investigation could have significant consequences for OKX and influence how Web3 platforms are regulated across Europe in the future.
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