The founder of cryptocurrency exchange OKEx has been taken into custody by Shanghai police officials after allegedly being involved in a fraudulent scheme regarding the WFEE Coin, Sina Finance reported on September 11, 2018.
Xu Put Through Questioning, His Business in The Clear
Star Xu is currently assisting officers in Shanghai investigate fraudulent activity on the part of the WFEE coin, of which he is a shareholder.
As a shareholder, Xu can be deemed responsible for any fraudulent efforts the company might be involved in.
cnLedger, a source for Chinese cryptocurrency and blockchain related news on Twitter, reported that a preliminary investigation concluded that Xu’s Shanghai-based company did not have links to any illegal activity.
According to the report, the alleged fraud was not conducted in Shanghai, but in Beijing, with local police officials saying that documents regarding the investigation will be handed to Beijing police.
However, several investors have allegedly argued that the team behind the WFEE coin which they purchased was based in Shanghai, and with Xu being a shareholder in WFEE, he is still regarded as a person of interest in the investigation.
Sina Finance reported that Shanghai police took Xu at around 10 pm on September 10 to assist with the investigation. According to cnLedger, Xu was released on 9:30 pm September 11, just before the maximum custody limit of 24 hours was due to run out.
According to reports, WFEE issued native tokens which were sold through the company’s website, which prompted many investors to suspect that the venture might be fraudulent. However, even though Shanghai police are now conducting an official investigation, no further details are revealed about the case.
While surprising to some, The move comes amid an ever-tightening regulatory stranglehold over cryptocurrency activity in China. A fresh tranche of foreign exchanges would be added to the country’s Great Firewall by the end of 2018 in a bid to stop any form of cryptocurrency trading. The Chinese government has also cracked down on all kinds of activities regarding cryptocurrencies that it dubbed as “promotional.”
News of Xu’s arrest has undoubtedly raised eyebrows outside of China, with many arguing that the pressure put on crypto-related businesses is nothing short of bullying.
However, WhalePanda, the well-known commentator on cryptocurrency, argued that China’s diminished importance for the industry meant that legal difficulties concerning its businesses were not the market movers they once were.