OKX and the Risks of Centralized Exchanges
We have covered the pros and cons of centralized exchanges, now we take a look at the specific example of OKX, TON and the probable future decline of these exchanges
TON aims to be the first cryptocurrency suitable for, and capable of, mass use by millions, even billions of people of all walks of life, anywhere in the world.
There is still much that needs to be done to make things simple, convenient, and above all else, safe.
At TON News we have covered, also in TON Analysis, issues around safety and the lack of sufficiently positive user experiences among newcomers to crypto.
Where do users go to when there is a problem? Is it the responsibility of the TON Foundation to look out for users interests as well as taking care of technology?
We think that while The Open Network Foundation can assist with information, specifications and development, it is up to users to organize for other services.
Examples are the various loopholes, due to insufficient safety around the implementation of Web wallets and verification of un-compromised authenticity, as well as failures in some non-custodial wallets around preventable user errors which can result in the loss of all TON coin balances.
Essentially, with cryptocurrency, comes much freedom but also with it great responsibility. You are generally rather much âon your ownâ, unlike when having an account with a bank, which has services you can turn to in the event of problems, and also tighter regulations around services and obligations.
Centralized Exchanges
If you want to purchase TON or trade it with other currencies, a most convenient option are centralized exchanges, such as OKX.
However, the convenience comes at a potentially very high price, and recent mishandling of TON customers by OKX once again highlights the dangers.
Firstly, it is worth repeating, once you place any funds or coins into a centralized exchange, you have lost all direct control over them for as long as they are on the exchange. You may feel it is safe like putting money in a bank, but this is not so.
Aside from the possibility of exchanges being hacked, as has happened to even the largest among them, or of closing down, declaring bankruptcy or simply running off into the night, you are powerless in any such situations, and more:
The exchange freezes your coin for any reason whatsoever
The exchange has web server or other technical problems
OKX Migration Debacle
In the case of OKX, probably the most popular exchange these days for TON, they have, at the request of the TON Foundation, decided to embark upon a change of the TONCOIN token to TON.
One might think this would be a simple case of editing âTONCOINâ to become âTONâ throughout the system, but it is evidently more involved.
The âmigrationâ as they call it from âTONCOINâ to âTONâ was announced by the TON Foundation to those following its Telegram channel, but was not even announced by OKX other than on a back page on the website which they send the link to whenever anyone complains or asks âwhat happened to my TON?â
The time line for various stages of the migration does not appear to have been followed, with it starting earlier than stated, and in any case, there is no end date given, whatsoever. Neither a promise of 24 hours, one week, a month, or a year.
OKX treat the TON Community with such disdain, that they didnât even announce the migration on their busy Telegram announcements channel. Nor have they provided any reassuring updates, apologies, or further information.
The hapless support agents, sourced on slave wages in low cost locations, as is the norm these days for profitable tech companies, can do nothing but ask users for patience and refer again and again to the original back page on the website.
This is of course, an appalling manner of treatment and shows the priorities of top management: they bring in all and sundry minor and obscure cryptocurrencies onto the exchange, and announce such and other trivia with much fanfare, but never a work about the many TON holders who have lost all their TON.
For now at least, but it could be forever. What is to say it wonât be? Almost a week has passed, with no updates since the announcement on 18 April, as of 26 April, no updates whatsoever. TONCOIN disappeared around 20 April, almost a full week ago. All those TON are inaccessible to those who deposited them, and meanwhile the price of TON rose from below USD 2 to above 2.3 and fell back below, before now rising again.
Losses for Traders
There are already significant losses for all those who had TON on the centralized exchange, and did not withdraw ahead of the âmigrationâ. OKX could very easily have warned all its app users via an in app notification to all those that held funds in TON, but they chose not to. They could have announced it on their Telegram channels, with timed warnings ahead of D-Day but again chose not to.
They have had 6 days and mounting in which to offer explanations (or lies, as is usually the case with companies these days, more priority being given to reputation and image and bottom lines, than honesty and integrity), apologies or reassurances. Even the biggest of data migrations doesnât take days unless there are major problems.
This does not necessarily mean that everyone wonât get back their TON. OKX do have snapshots of their users TONCOIN balances prior to migration.
While on the subject of priorities of centralized exchanges toward customers. What do you think they do with all those payments they receive each day into their wallets, where senders often neglect to include the reference number?
They never tell us. Obviously, if they were well intentioned, and not ready to profit from everything possibly âlegalâ but not moral, theyâd have many options: waiting a certain period for users to contact them (which they currently do), if they do not hear anything about the funds, they could easily send a 0.000000001 TON payment with a note âPlease contact OKX with reference XYZâ, and after another period, simply return the funds to the wallet that sent them in the first place.
The fact that they do NOT do this, and because no one wonders about it or asks, just allows the owners of these exchanges to buy several more yachts, private jets, politicians, etc. They evidently donât care, otherwise such obvious sources of erroneous income would be mentioned in their FAQs.
Centralized vs Decentralized Exchanges
Therefore it is only too obvious that the many who were burnt by this experience arenât going to want to keep TON on OKX in future, except for calculated short-term risk conversions, and there are now rapidly growing better alternatives fit some features: including Cryptobot Exchange, which we will cover in another article, as well as decentralized exchanges and decentralized finance (DeFi) platforms.
It is easy to see that centralized exchanges, which have made a few people extremely wealthy in a short span of time, but which do not adequately cater to their clients but have massive armies of support agents which can barely keep up with the many support requests, are on their way out.
They essentially became the ânew banksâ in the cryptocurrency world, but with less of the guarantees and safeguards of the existing banks that we love to hate.
Even those disruptive companies such as Wise, which have brought so much benefit to millions of users, and excellent customer services, far exceeding any traditional bank for the average account holder, have succumbed to political correctness and policies which disrespect large sections of their clientele.
With any centralized system, there are efforts exerted to obtain customers, and provide services, but once hooked in, these same services often neglect then, and start taking those customers for granted. After all, without competition, where will they all go?
FTX, Binance, they all have their problems and limitations. Most people are fine but the moment things go wrong it can be a very different situation or take a long time to resolve.
The answer is that if there is nowhere else to go, people will again create services and solutions that cater for that gap in the market.
This is where TON users must gather and form alliances that can take on their interests, collectively, such as pushing various entities toward required actions against scammers, thieves, neglectful exchanges, and so on.
Experiences? Thoughts? Let us know in the comments belowâĻ