OKX CEO Star Xu has publicly defended the exchange's decision to freeze approximately $40,000 worth of Global Dollar (USDG) stablecoins after a user admitted to purchasing verified accounts to bypass regional restrictions. The incident, which unfolded over several days in January 2026, highlights the strict enforcement of Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols by major cryptocurrency exchanges.
The controversy began when a user known as "Captain Bunny" posted on X (formerly Twitter) on Sunday, January 12, 2026, alleging that OKX had frozen four accounts containing USDG tokens. The user stated the funds were intended to cover his father's medical expenses. Crucially, Captain Bunny admitted the accounts were purchased in late 2023 and were originally verified under other individuals' names, a common tactic used by users in mainland China to circumvent local trading restrictions.
The freeze was triggered when OKX's security systems required facial recognition verification. Since the accounts were registered under different identities, the user was unable to complete the biometric check and regain access to the funds.
In a detailed public response on Monday, CEO Star Xu firmly defended the exchange's actions. "OKX requires all users to use the platform with real-name verification. Account buying and selling behavior explicitly violates the OKX platform service agreement," Xu stated. He argued that transferring account control based on emotional appeals would constitute a serious breach of the platform's obligation to safeguard user assets and comply with legal regulations like AML and counter-terrorism financing (CTF) rules.
Xu posed a hypothetical scenario: "If you purchase someone else's account, and the original account holder subsequently provides valid and complete identity information... and requests the platform to reset account login and withdrawal permissions, should OKX put its trust in the person who can demonstrate the identity of the account or in the person who can't provide any identity information?"
Despite the violation, Xu outlined a narrow, conditional path for potential asset recovery. He stated OKX might assist in clearing the user's assets if three strict conditions are met simultaneously: 1) The original KYC-verified account sellers must "explicitly disclaim" ownership of the funds; 2) The accounts must not be subject to any law enforcement inquiries or court-ordered freezes; and 3) The user must provide "verifiable" evidence of the funding sources that satisfy legal standards. Xu emphasized that asset clearance and account closure would only proceed after a "careful and comprehensive review" and in full compliance with laws and regulations.
The crypto community's reaction largely sided with OKX's stance. Commentators like crypto investor Lugeweb3 warned that making exceptions would create a dangerous precedent, potentially opening the door for future fraud. The incident underscores the inherent risks for users who employ workarounds like purchasing accounts, especially as exchanges like OKX intensify biometric checks and internal monitoring to meet growing global regulatory scrutiny.
