Why Bitcoin price abruptly dropped 3% in 30 minutes on OKEx freeze

Upon the news, the price of Bitcoin abruptly plunged 3% in 30 minutes across major exchanges.

OKEx says a private key holder is cooperating with investigators, Bitcoin swiftly drops.

The OKEx team said one of the private key holders of the exchange is cooperating with a public security bureau in investigations.

"One of our private key holders is currently cooperating with a public security bureau in investigations where required. We have been out of touch with the concerned private key holder. As such, the associated authorization could not be completed. Pursuant to 8.1 Service Change and Interruption of the Terms of Service, OKEx may change the Service and/or may also interrupt, suspend or terminate the service at any time with or without prior notice."

Immediately after the OKEx statement was released, the price of Bitcoin dropped from $11,514 to $11,190.

Bitcoin exchanges typically implement a multi-signature system to process withdrawals from cold storage, i.e. a wallet that is not connected to the internet.

In the case of OKEx, the exchange said that one of the private key holders isn't able to approve withdrawals.

The price of Bitcoin fell sharply on the OKEx news for two main reasons.

First, OKEx is a major exchange that processes substantial amounts of both spot and futures volume.

Leo Weese, the president at The Bitcoin Association of Hong Kong, said he was surprised by the fact that one person could affect an exchange's entire cold storage multi-sig system.