OKCoin Refutes Investing Client Funds Into “Wealth Management Products” Claims
One of China’s biggest digital currency exchanges has refuted claims it used clients’ funds to invest in financial products deemed risky.
According to state newswire Xinhua in an August 17 report, both Huobi and OKCoin exchanges reportedly invested around 1 billion yuan ($150 million) of idle client funds into “wealth-management products” citing an investigation by the People’s Bank of China.
These products in China are often considered high-yielding and risky as they are said to build blocks of a shadow-banking system that exists largely off banks’ balance sheets. Their off-balance value rose 30% in 2016 to exceed 26 trillion yuan ($3.9 trillion), according to the central bank.
However, in a statement on Aug 23, OKCoin acknowledges there have been rumors and false allegations against its exchange that it’s been using idle client funds for such investments and denied the claims as false.
“We would like to assure all parties, and especially our customers, that we have a strict policy of placing idle client funds into bank-backed low risk products for safe-keeping.
We consider the safety and integrity of our client funds as our most important responsibility.”
While some of the comments that have trailed the news point out that it may not be totally wrong for the exchange to use the stored wealth for their own benefit, others think one of such deals could go bad leading to bankruptcy.
The development has also triggered further discussions about the need for users to move to decentralized cryptocurrency exchanges which do not allot full control of funds on their platforms to a central authority.