OKX Pledges to Improve Risk Flagging After User Concerns

Crypto exchange OKX has pledged to enhance its information collection process following an incident where its risk flagging system incorrectly identified several users as high-risk. The issue, which has caused concern among users, involves the exchange's automated system mistakenly tagging normal users as risky, leading to potential disruptions in their trading activities. OKX has acknowledged the problem and assured users that it is taking steps to rectify the situation. The exchange has pledged to improve its risk assessment algorithms and data verification processes to prevent such errors in the future. This move is part of OKX's broader effort to enhance user experience and maintain trust in its platform.

The incident highlights the challenges faced by crypto exchanges in balancing security measures with user convenience. While risk flagging systems are essential for preventing fraud and ensuring compliance, they must be calibrated to avoid false positives that can inconvenience legitimate users. OKX's response to the issue demonstrates its commitment to addressing user concerns and improving its services. The exchange's proactive approach in acknowledging the problem and taking corrective actions is likely to be well-received by its user base, who value transparency and reliability in their trading platforms.

In a recent post, OKX detailed the necessity of its compliance and risk control systems, explaining that these processes are vital to ensure the platform remains free from illicit use and meets the required compliance laws. The exchange also asserted that it vets its staff and upholds a zero-tolerance stance on misconduct, including spreading disinformation, engaging in insider activities, or undermining user rights. It added that it has several internal monitoring checks to help spot infractions and take action promptly.

For its clients, the exchange stated that its systems perform identity verification (KYC checks), monitor transactions, screen against sanctions lists, and detect potential market manipulation. It also incorporates third-party databases with proprietary behavioral models to help identify suspicious or risky accounts. Should an account be verified to have breached legal requirements or user agreements, the exchange responds by issuing notices, requesting additional information, suspending certain features, or closing the account permanently. However, if a user’s account is tied to sanctions or terrorism, the exchange will freeze their assets.

OKX acknowledged that its compliance and risk control systems are not 100% accurate, having flagged several normal users as risky. The exchange argued that many service providers typically use an aggressive approach in identification checks, driven partly by regulatory guidance recommending prudence in risk oversight. As a result, even fully compliant users with normal activity may occasionally receive additional information requests from the compliance team. The notice also claimed that platforms evaluate customer risk levels on multiple factors. If one’s account is found to be high risk, more investigation into where the funds originate is conducted.

The exchange, nevertheless, acknowledged that false positives are an issue in any compliance system. It further commented, “We are continuously improving the user experience for submitting documents after triggering risk controls. If you are asked to provide information such as the source of funds, proof of address, or past employment details, please don’t worry—just submit the information truthfully.” It also assured users that as long as they are not involved in any criminal activity, their account and funds will not be affected, and the platform is still obligated to protect their privacy.

One user, however, accused OKX of maliciously freezing user account funds and excessively collecting user privacy information. He explained that the exchange had asked for more information multiple times and even froze about 10,000 USDT in his account. He claimed he contacted the platform’s customer service and submitted tickets, which led to more inquiries about his work history and residential addresses. From his experience, he concluded that the exchange only wanted to trouble its consumers, saying it should be a wake-up call to everyone. He claimed the exchange starts by asking for additional info and then moves on to ask for more repeatedly before eventually freezing your account and rejecting your application.