European Regulators Are Investigating Crypto Exchange OKX's Trading and Self-Custody Offerings

European regulators are said to be looking into crypto exchange OKX's trading and self-custody offerings after revelations that North Korea's Lazarus Group laundered funds

European regulators are reportedly scrutinizing crypto exchange OKX’s trading and self-custody offerings following revelations that North Korea’s Lazarus Group laundered funds from the $1.5 billion Bybit hack through the platform.

The issue was discussed at the European Securities and Markets Authority’s (ESMA) Digital Finance Standing Committee meeting on March 6, according to a Bloomberg report on Tuesday, which cited sources familiar with the matter. The meeting included regulators from all 27 EU member states, officials from the ESMA and the European Banking Authority (EBA).

Among the topics discussed was a presentation by ESMA on its analysis of the European Union’s Markets in Crypto Assets (MiCA) regulations, which took full effect in January. MiCA provides exceptions for decentralized applications, but some regulators suggested that crypto exchanges should be covered by the rules for their Web3 services.

One regulator reportedly said that crypto exchanges are now offering non-custodial services, which are typically associated with decentralized protocols. The regulator suggested that these services should fall under MiCA’s provisions.

However, another regulator reportedly argued that crypto exchanges’ non-custodial services are different from their core trading activities, which are covered by MiCA. This regulator suggested that the new offerings should not be included in the regulations.

Regulators also discussed the implications of crypto firms' rapid innovation for the regulatory landscape.

If found to be breaking the rules, OKX could face significant penalties, including losing its MiCA license, which it obtained in February.

OKX has denied that it is under investigation, stating on its official X (formerly Twitter) account that its non-custodial Web3 offerings are “no different” from similar services provided by other industry players.

The issues surrounding OKX seem to have affected its native token, OKB, which briefly dipped below $40 on Tuesday before recovering to $40.71 by press time. The token has dropped 5% in the past 24 hours and fallen 15% over the last 30 days.

Relative Strength Index (RSI)

The RSI stands at 34.90, indicating that OKB is close to oversold conditions, which could signal a potential rebound.

Bollinger Bands

The Bollinger Bands (BB) show resistance at approximately $44.75 and support near $39.27, suggesting a tight trading range in the short term.

As the bands are converging, it indicates a low level of volatility, which could lead to a breakout from the Bollinger Bands. A move above the upper band, currently around $44.75, could signal a strong bullish trend, while a break below the lower band, now at $39.27, might indicate increased bearish pressure.

Overall, the RSI and Bollinger Bands suggest that OKB is approaching oversold territory, and a rebound from the support level could be on the cards. However, it’s crucial to note that these technical indicators provide insights, not investment advice.

Earlier this year, Bybit CEO Ben Zhou claimed that at least $100 million in assets flowed through OKX’s Web3 platforms following the February hack. The statement came after a U.S. court ordered North Korea’s Lazarus Group to pay $620 million in restitution for the hack.

The firm’s statement said that the firm’s internal analysis, in cooperation with blockchain analytics firms, had identified at least $100 million of the stolen assets passing through OKX’s Web3 platforms in accordance with blockchain protocols.

The statement added that the firm was unable to identify any of Bybit’s user funds among the stolen crypto assets.

The analysis also found that the hackers used several protocols and crypto mixers in an attempt to obfuscate the stolen funds’ origins.

Meanwhile, security researchers have said that 20% of the stolen funds have now “gone dark,” rendering recovery nearly impossible.