OKX pledges to compensate users after exchange token flash crash

Prices have since stabilized, and the OKX team is working on a compensation plan for affected users

January 23, 2024 04:28 pm

photo_gonzo/Shutterstock modified by Blockworks

Crypto exchange OKX saw the price of its token OKB flash crash from around $50.69 to as low as $25.10 on Tuesday.

The token price has since recovered and is currently trading at $47.27, according to data from CoinGecko.

OKX said in a statement that the high volatility was the result of the automatic liquidation of several margined positions after the token price dropped from 50.69 USDT to 48.36 USDT.

Flash crashes are not uncommon in the cryptocurrency space or traditional finance, often caused by accidental sell orders.

In June last year, a Citigroup trader in London accidentally made a “fat finger error” by adding an extra zero to a trade, leading to an estimated $325 billion being wiped from the market at one point in time, the Guardian reported.

Bitcoin, too, has suffered from its own fair share of flash crashes over the years. Earlier this month, following the publication of an ETF-focused report from Matrixport, the price of BTC fell sharply before recovering.

OKX said it is looking into additional management controls and liquidation mechanisms to prevent future abnormalities.

In the meantime, however, OKX said it is working on a compensation plan, which will be released in the next three days for users affected by the liquidations.

“We understand this situation is unusual and apologize to impacted users. Compensation will be provided to users who experienced losses as a result of abnormal liquidations, including users of flexible loan, margin trading and multicurrency trading products,” The company wrote.

OKX declined further comment when reached by Blockworks.

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