https://cryptonews.com/news/okx-halts-defi-service-amid-eu-regulatory-scrutiny/

Crypto exchange OKX has temporarily suspended its decentralized exchange (DEX) aggregator in response to concerns over its alleged misuse by the North Korean hacking group Lazarus.

The move comes amid heightened regulatory scrutiny from European authorities investigating the platform’s role in laundering funds from a major crypto heist.

In a statement on March 17, OKX confirmed that it had detected a coordinated effort by Lazarus Group to exploit its DeFi services.

“After consulting with regulators, we made the proactive decision to temporarily suspend our DEX aggregator services. This move allows us to implement additional upgrades to prevent further misuse,” the company said.

OKX Maintains Wallet Services Despite DEX Suspension

While OKX has not provided a specific timeline for reinstating the service, the exchange’s helpdesk assured users that crypto wallet functionalities would remain active.

However, it noted that new wallet creation would be paused in select markets during the suspension period.

On March 11, Bloomberg reported that European financial regulators were investigating OKX’s DEX aggregator, OKX Web3, over allegations that it facilitated money laundering linked to the Bybit hack.

The attack, which resulted in $1.5 billion in stolen funds, allegedly saw nearly $100 million laundered through OKX’s Web3 proxy, according to Bybit CEO Ben Zhou.

In response, OKX dismissed the accusations as misleading, emphasizing its proactive approach to countering financial crime.

“Over the past few days, we’ve faced targeted media attacks questioning our integrity and operations,” the company stated in a blog post.

“We can’t ignore the fact that these attacks are happening at a time when we are actively fighting against financial crime.”

OKX clarified that when Bybit was hacked, it took immediate action by freezing related funds entering its centralized exchange (CEX) and developing new security measures to prevent similar incidents.

The firm also criticized media reports for inaccurately identifying its DEX aggregator as the origin of illicit trades rather than merely a liquidity access point.

Enhanced Security Measures to Combat Misuse

To address regulatory concerns and strengthen its defenses, OKX has rolled out enhanced security protocols.

These include a hacker address detection system to track and block malicious addresses in real-time on its CEX and a system to ensure that blockchain explorers correctly identify the actual DEX processing transactions.

“We already rolled out a lot of controls for OKX Web3 to combat misuse, including prohibited market IP blocking and real-time black address detection,” said OKX CEO Star Xu on March 17.

OKX also reaffirmed that its Web3 DEX aggregator does not act as a custodian of user assets.

Instead, its primary function is to provide access to liquidity across multiple protocols.

“Some have deliberately misrepresented our platform,” the company stated, defending its role in the DeFi space.

As reported, Chainflip, a cross-chain DEX, is preparing a protocol upgrade aimed at preventing hackers responsible for the recent $1.4 billion Bybit hack from using its platform to launder stolen assets.

The upcoming 1.7.10 upgrade introduces enhanced screening tools that allow broker operators—including platforms like SwapKit and the Rango DEX aggregator—to reject suspicious deposits of ETH and ERC-20 tokens.