Kraken users are demanding compensation after violent localized flash crashes on the exchange that resulted in the liquidation of leveraged trades amid the sharp retracements recorded in the crypto markets on February 22.
February 22 saw the largest daily candle in Bitcoin and Ethereum history in linear terms, with BTC falling around $ 9,500 to $ 57,500, while ETH falling $ 400 to $ 1940. in 24 hours on Coinbase.
However, it appears that a combination of weak buy support and cascading liquidations resulted in particularly heavy losses on Kraken – with BTC falling 22% to below $ 45,000 while ETH fell by 64% to find support at just $ 700.
The public reaction to the r / Krakensupport subreddit saw many marketers voice their frustrations. Some traders are even threatening to take legal action against the exchange, with Reddit user “dtk6802” claiming to have lost the majority of his savings amid the flash crash:
“I lost most of my savings and didn’t receive a response from a human. I think they would refund or lose all of their customers. My stomach hurts, but I will join the trial with lots of evidence (screenshots) if it is not paid back. ”
However, the fallout seems to some to have extended beyond losses and indebtedness, with Reddit user “GoEers304” claiming their balances indicate they now owe Kraken money in the wake of the crash. flash.
“Somehow I now owe them $ 120. How does an account go in the negative? I had a lot of headroom to cover all other platforms, but who can cover a false 90% drop? ” they said.
Despite calls for compensation for flash crashes by Kraken users, social media comments suggest that the exchange will not reimburse traders for their losses.
I heard about Kraken’s support and they said they had no control over it. And no refund.
– Cannibal Kiwi (@ CannibalKiwi21) February 22, 2021
To protect against wholesale liquidations in the event of sudden and localized flash crashes, many crypto derivative platforms have long used a index price to determine margin calls.
While other platforms also suffered violent flash crashes, with Ether in particular falling on Nexo, the trading platform indicated on Twitter that it would reimburse users for losses incurred during the fall:
An interruption of service at an exchange partner resulting in trading anomalies has led to the incorrect liquidation of ETH balances of some Nexo customers. These liquidations will be canceled. We apologize and will keep you posted.
Your funds are safe.
– Nexo (@NexoFinance) February 22, 2021
Closeouts have not been uncommon amid recent crypto price volatility. On February 15, an approximately 11% drop in the price of Ether sparked $ 1.89 billion in sell-offs in the broader crypto markets. The majority of SA liquidations have taken place on Binance, with $ 336 million of Ether and $ 55 million of BTC cleared from user balances.