Secure Private Key Backups Promised By OKX Exchange

Jay Hao stands as the CEO of OKX, and has recently announced that the exchange is gearing towards increasing the security of its various fund storage methods. This statement was broadcasted first on Telegram, but was later posted on OKX’s website, as well.

Five Weeks Without Withdrawals

On the 16th of October, 2020, OKX had announced that all withdrawals of cryptocurrencies were to be frozen for its users. As one would imagine, it caused massive waves across the crypto industry at large. This freeze of withdrawals was thanks to one of the multi-signature wallets of the exchange having one of its private keys go missing. As a result of this, the exchange couldn’t process any withdrawal requests.

The result of this was around $2.3 billion worth of Bitcoin (about 200,000 BTC) being locked up within the OKX exchange wallets thanks to this incident. This information comes by way of Glassnode, a notable blockchain analysis firm.

It took five long weeks before the funds were eventually unfrozen, allowing the exchange to continue facilitating various withdrawals.

Learning From your Mistakes

In a public statement, probably trying to save Face, this week’s announcement had Hao declare the entire event a hard lesson for the company itself and its management. He explained that the incident at large had highlighted a number of key facts to consider, showing weaknesses within the exchange’s internal process. Of course, Hao was quick to declare how eager his firm was in correcting these mistakes.

The OKX announcement detailed that the crypto exchange will still use the multi-signature wallets, but with some improvements. Most notably, the exchange will now hold backups of the various private keys in case they need to be retrieved in an emergency situation.

Some Impressive Measures

Another key fact about this, is the key backups will be spread across bank safes, which themselves will be spread across three respective countries. The exchange stated that employees that hold private keys are no longer allowed to travel together in the same vehicle, going as far as to bar the three private key holders from being in the same country at the same time.

Should any unforeseen event occur that renders one of these private keys unavailable, in case of a tragic accident or death, the exchange will now be able to retrieve the backup private key. According to the statement, it’ll only take around 48 hours.

Multi-sig wallets is the standard for most centralized crypto exchange, with OKX being one of them. These new security measures, while extreme to some, will most likely ensure that the exchange’s wallets stay safe.