CEO Global, a Hong Kong-based cryptocurrency exchange, recently announced that the Chinese authorities have taken one of its founders under the latest crackdown on fraudulent SIM card and bank account fraud.
“Affected by the ongoing national crackdown on fraudulent SIM cards and bank accounts, the bank account of one of our core founders has received illicit money from international fraudsters and scammers,” the exchange noted.
The founder was taken 15 days before for investigation, and the exchange still has no idea when the police will release him.
Additionally, the uncertainty has affected the cryptocurrency withdrawals from the exchange as the founder holds the private keys to most of the cold wallets of the exchange.
CEO Global has now suspended all of its withdrawals, citing its inability to process all withdrawal requests from the digital assets held in the hot wallets.
This situation is similar to what OKEx faced recently with the abrupt detention of one of its private key holders by the Chinese police. The exchange suspended its withdrawals for weeks before resuming them in November last week.
Another Crackdown by China
The Chinese authorities are cracking down on the rising fraudulent SIM cards and bank accounts scam in the country.
Chinese people not willing to disclose their identities when purchasing SIM cards or opening bank accounts, often opt for existing SIM cards or bank accounts held in the names of other people.
Though mostly fraudsters are seeking such services, they are also popular within the Chinese crypto community.
The Chinese police reportedly arrested over 4,600 people and confiscated about 65,000 bank cards in merely two weeks of commencing its nationwide crackdown. Moreover, it barred more than 15,000 people from opening bank accounts in the next five years.
In addition to the withdrawal suspension, CEO Global is closing its over-the-counter (OTC) services in suspicion of a further crackdown by Chinese authorities.