An interview with OKCoin CEO after the incident in SH

Xu Mingxing

Since the afternoon of September 10th, a video clip of a conversation between Xu Mingxing, CEO of OK group and police officers in Shanghai has been circulating in China’s media platform.

Soon the news becoming Xu Mingxing was taken by the police to assist an investigation. Many individual investors came to the police station to file allegations against Xu Mingxing on swindle the second day.

Media reporters managed to reach out to Xu Mingxing on September 12th. During the interview, Xu explained what on earth has happened and the reasons behind.

Original interview can be read here.

Xu also said he does not suggest Chinese users to engage in digital assets trading and he does not think it’s a good idea for ordinary users who are not specialized in risk control and trading to participate in leveraged deals.


On the incident in Shanghai

Q: Several OKEx users whose crypto position was wiped out due to leveraged deals have filed allegations to Shanghai’s police office. According to the description of witnesses, those users have called police on you. What have you been through on that day?

A: No one called police on me. Some strangers knocked my door so I called the police and briefed them.

Q: Investors have filed allegations against you and your company for fraud and swindle. How do you want to respond to that?

A: It’s everyone’s civil right to call police when they are accused of fraud, theft, robbery or battery. Police will also ask you to make a brief.

So when someone called police on me in Shanghai, I went to the police station to make a brief and to prove that I did not commit frauds. I don’t think my behaviors constitute fraud. The one who called police on me has never made wire transfers to me or my companies, nor did he sign a contract with me. I have nothing to hide. I never committed frauds.

After I finished my brief, I left the police station.

Q: But the informant was a victim of the leveraged deals on OKEx. He believes that OKEx is your company.

A: I’m not legal representative of OKEx, nor its shareholder, board member. OKEx is a Malta company.


On the leveraged deals

Q: What’s your opinion on the leverage tools provided in digital asset exchanges?

A: Leverage deal is invented by mathematicians and financial workers. It is designed for arbitrage and hedge deals. Leverage is a neutral tool. But there is a lot to learn in its application. It’s harder to handle and requires much more professional knowledge on risk management.

One major risk regular investor will meet in leverage deal is out of position. They need to have enough margin to run leverage deals. When their account can’t meet the requirement of margin call, they will be out of position.

Leverage is a tool to optimize user’s trading strategy.

Q: If leverage deal requires professional knowledge, should exchanges set a few restrictions to keep it away from regular users?

A: Leverage deal is not suitable for regular users. When your deals are leveraged, the rate of profit/loss is amplified. I do not suggest Chinese users to engage in digital assets trading and I do not think it’s a good idea for ordinary users who are not specialized in risk control and trading to participate in leveraged deals


On digital asset exchanges

Q: What’s your opinion on digital asset exchanges?

A: Digital asset exchange is under different regulation in different districts. In China, all the crypto-related business is forbidden. And exchanges in China have all been shut down last year.

In US, you need to acquire licenses from FinCEN and MTL to run a crypto exchange platform. If the tokens on your platform are considered as security, you will also be regulated by SEC.

Anyway, digital asset exchange is clearly prohibited in China.

Q: As far as I know, Chinese exchanges like OKEx, Huobi, Binance are still serving Chinese users.

A: As far as I know, most of the users are non-Chinese users in those platforms. Some Chinese users might be using VPN to access to them.


On Xu Mingxing himself

Q: OKcoin has set an office in Shanghai, what do you come to Shanghai for?

A: We have acquired an instrument examination company in Shanghai in 2016. The office belongs to that company.

We are working on blockchain technology and have set up OK Blockchain engineering lab. We want to explore blockchain in a higher level. That’s what I’m doing now.

Image Source

Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

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