On Monday, cryptocurrency exchange OKX announced the temporary suspension of its decentralised finance (DeFi) service following regulatory scrutiny and media reports that link the platform to a $100 million money laundering operation.
The decision came after consultations with European Union (EU) regulators, who are investigating the exchange’s role in facilitating the laundering of funds stolen in the $1.5 billion Bybit hack earlier this year.
“After consulting with regulators, we made the proactive decision to temporarily suspend our DEX aggregator services,” OKX said in a statement. “This move allows us to implement additional upgrades to prevent further misuse.”
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OKX responds to regulatory pressure
Bloomberg report revealed that EU regulators had zeroed in on OKX’s Web3 platform, which the North Korea-linked Lazarus Group allegedly used to launder about $100 million from the Bybit heist.
The February hack, one of the largest and most advanced in crypto history, has drawn attention from global authorities.
OKX, which operates under the EU’s Markets in Crypto-Assets (MiCA) regulations, faced intense scrutiny during a March 6 meeting of the European Securities and Markets Authority’s Digital Finance Standing Committee. Regulators from Austria and Croatia argued that OKX’s Web3 platform should fall under MiCA’s jurisdiction due to its integration with the company’s centralised exchange.
In response to the allegations, OKX has rolled out a hacker address detection system and introduced real-time tracking to block suspicious activities. “Our goal is to ensure that explorers properly highlight the actual DEX processing trades rather than mistakenly identifying our aggregator as the point of trade,” the company stated.
Despite the suspension, OKX emphasised that its Web3 platform is not a custodian of customer assets. “One thing we want to make absolutely clear: OKX Web3 is a DEX aggregator, not a custodian of customer assets,” the company said.
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A broader debate on compliance
The incident has reignited debates about balancing regulatory compliance and decentralisation in the crypto industry. As EU regulators tighten oversight under MiCA, platforms like OKX face increasing pressure to align with stricter rules while maintaining their decentralised principles.
“You’re either compliant or you’re censorship-resistant. Anything in the middle is a dead end,” tweeted Armani Ferrante, CEO of crypto wallet and exchange Backpack on his official X handle.
Lastly, OKX has maintained that it remains committed to regulatory compliance and strengthening security to prevent misuse of its services.