European regulators are investigating OKX after hackers used its Web3 platform to launder approximately $100 million in stolen crypto from the ByBit hack. Authorities are assessing whether the platform falls under the Markets in Cryptoassets (MiCA) regulations and whether penalties should be imposed. The scrutiny follows a broader discussion among national watchdogs about the oversight of crypto exchanges under the new EU framework.
ByBit Hack: EU Considers Sanctions on OKX Over Stolen Crypto Laundering
According to a Bloomberg report, hackers laundered $100 million in crypto from the ByBit hack through OKX’s Web3 service. The stolen assets were primarily Ethereum (ETH) and were moved through decentralized platforms and cross-chain bridges. The incident is considered one of the most sophisticated cyberattacks on the crypto industry.
EU regulators are debating whether the top crypto exchange’s Web3 platform should be classified under MiCA rules. Some authorities argue that its integration with OKX’s main platform makes it subject to regulatory oversight. Others contend that fully decentralized platforms are exempt from MiCA, complicating the decision on penalties.
Crypto regulations have been a big discussion, with ongoing debates about their impact on innovation. Most recently, Acting SEC Chair Mark Uyeda announced plans to reconsider a proposed rule that could have classified DeFi exchanges as regulated entities. Uyeda directed SEC staff to explore abandoning the Regulation ATS expansion, citing industry concerns over excessive compliance burdens.
Regulators Discuss Potential MiCA Violations and Penalties
At a meeting on March 6, regulators from the EU’s 27 member states reviewed the case under the European Securities and Markets Authority (ESMA). Watchdogs from Austria and Croatia stated that OKX’s Web3 platform should fall under MiCA rules due to its connection to the main exchange website.
Under MiCA’s Article 64, a license can be revoked if an entity fails to prevent money laundering or violates financial rules. European regulators, including ESMA and the European Banking Authority (EBA), are pushing for an investigation into whether OKX remains compliant with its MiCA license.
Malta May Revoke OKX’s MiCA Permit
More so, the top crypto exchange secured a MiCA pre-authorization in January through its European hub in Malta. The exchange later obtained permission to operate across the European Economic Area (EEA). However, Malta’s financial regulator is now reviewing whether to withdraw the permit due to the ByBit hack.
During the EU discussions, Malta’s representatives indicated plans to meet with OKX executives to address the situation. Authorities may impose sanctions or revoke OKX’s license if found in breach of MiCA regulations.
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