"OKX Settles $500M+ with DOJ Amid Crypto Scrutiny"

OKX, one of the top-five crypto exchanges, has been preparing for a major compliance failure settlement with U.S. authorities for some time. The company's meticulous planning, as revealed in a confidential crisis management document, suggests that it has been expecting a settlement with the U.S. Department of Justice (DOJ) and the Office of Foreign Assets Control (OFAC).

On Monday, OKX announced a $500 million-plus settlement with the DOJ after failing to secure a money transmitter license and allegedly facilitating $5 billion in "suspicious transactions and criminal proceeds." The settlement comes amidst intense scrutiny of the crypto industry by regulatory agencies.

The OKX document outlines a messaging "SWAT Team" that can be mobilized to implement various ways the firm's top executives can communicate a settlement via social media and when speaking to reporters. The document also provides specific guidance on settling with the DOJ and OFAC, including pointing out that the entire crypto industry has been under intense scrutiny and that OKX is cooperating fully with regulators.

The guidance refers to what is expected from OKX founder Star Xu, President Hong Fang, and other executives when it comes to their social media actions in two scenarios: 1) Leak before OFAC settlement, 2) upon OFAC settlement. If executives are asked if OKX has served sanctioned markets, one suggestion is to say: "Customers from sanctioned markets slipped through when we had immature compliance controls and systems [...] It is a very small and insignificant part of the Okcoin or OKX customer base."

Another priority for OKX is how the firm choreographs its big-ticket sponsorship arrangements with the likes of Manchester City football club, F1 team McLaren, and the Tribeca Film Festival. The firm estimates that around $100 million per annum has been spent on these partnerships over the past three years. The action plan for brand partners involves the OKX marketing chief giving each partner a phone call "at the last hour before the news breaks."

The OKX comms protocol emphasizes that execs should "refrain from mentioning OKB and reference this only if asked." This is likely due to concerns about any suggestion that OKB has been used as collateral or to finance any operations of OKX, as was the case with FTX's FTT token. The OKB exchange token was involved in a sudden flash crash in January 2024, after