OKX Launches New Custody Accounts In Wake Of 3AC Meltdown

Crypto exchange OKX on Tuesday said it will launch a new type of custody account to grant users more control over their funds and avoid risks. 

The “sub-accounts” are aimed primarily at token foundations and high-value investors, and will offer holders a slew of more risk management features, including permission controls for withdrawals and a kill switch function.

The launch comes in the wake of the Three Arrows Capital (3AC) meltdown, during which the hedge fund allegedly used customer funds to meet its margin calls. OKX assured investors it would not resort to such practices.

Custody accounts are typically used by big project teams and investors with a huge net worth. This is because they normally involve third parties in advisory or trading boards responsible for their financial management.

Lesson from the 3AC Incident

OKX has stated in their announcement that these new managed sub accounts are introduced to tackle the issues that were highlighted after the losses incurred by Three Arrows Capital.

These accounts are intended to  reduce the systematic risks that are present in the hedge fund investments.

3AC faces a major insolvency risk after a drop in the value of its collateral assets exposed it to a string of liquidations. This came after the hedge fund logged big losses on its investment in Terra, which imploded in May.

3AC has liquidated much of its holdings to meet its margin calls. The firm is now seeking external help to meet its debt commitments.

OKX Adds USDC support

OKX also announced that it will launch a USDC  trading market with several spot pairs of the token.

Circle’s USDC has seen increased adoption this year, amid growing uncertainty over popular stablecoin USDT. The former logged a 1000% jump in value since last year, and is poised to overtake USDT in 2022.

According to coinmarketcap’s data, USDC’s market cap is more than $55 billion. Its total trading volume, at the press time is more than $5 billion.