EU Regulators Probe OKX Over $100M Crypto Laundering Allegations

European Union regulators are reportedly scrutinizing crypto exchange OKX over allegations that its services were used to launder approximately $100 million in funds stolen from rival exchange Bybit. The investigation centers around OKX's decentralized finance platform and wallet service, with regulators examining whether these services fall under the Markets in Crypto-Assets (MiCA) regulatory framework.

The scrutiny was discussed during a meeting hosted by the European Securities and Markets Authority’s Digital Finance Standing Committee on March 6. Regulators from at least Austria and Croatia have expressed concerns that OKX's Web3 service should be subject to EU rules, despite the platform's decentralized nature potentially exempting it from MiCA regulation.

OKX has strongly denied the allegations, asserting that there are no ongoing investigations by the EU. The exchange refuted claims made by Bybit CEO Ben Zhou, who asserted that nearly $100 million in stolen Ether (ETH) was laundered through OKX’s Web3 proxy, making a portion of the funds untraceable. OKX's chief marketing officer, Haider Rafique, described the suggestion that the company was involved in laundering stolen funds as "preposterous."

The theft of $1.5 billion in ETH and ETH-related tokens from Bybit, attributed to the North Korean hacking group Lazarus, is the largest crypto hack to date. Bybit's CEO has declared war on the Lazarus Group, with 3% of the stolen funds frozen and 20% reportedly gone dark.

The investigation into OKX underscores the increasing regulatory scrutiny faced by crypto exchanges in the EU. As the region moves towards a unified regulatory framework with MiCA, exchanges are under heightened pressure to ensure compliance and transparency in their operations. The outcome of this investigation could set a precedent for how decentralized finance platforms are regulated within the EU, potentially impacting the broader crypto industry.