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Kraken users are demanding compensation after violent flash crashes localized to the exchange resulted in leveraged trades being liquidated amid the sharp retracements recorded across the crypto markets on Feb. 22.
Feb. 22 saw the single largest daily candle in the history of both Bitcoin and Ethereum by linear value, with BTC dropping around $9,500 from $57,500, while ETH plummeted by $400 from $1,940 within the span of 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 less than $45,000 while ETH declined 64% to find support at just $700.
The public reaction on subreddit r/Krakensupport has seen many traders voice their frustrations. Some traders are even threatening to organize legal action against the exchange, with Reddit-user “dtk6802” claiming to have lost the majority of their life savings amid the flash-crash:
“I lost most of my life savings and haven’t received a response from a human. I’d think they would refund or they would lose all their customers. I’m sick to my stomach but will join the lawsuit with plenty of proof(screenshots) if not refunded.”
However, the fallout appears for some has extended beyond losses and into debt, with Reddit-user “GoEers304” claiming their balance indicates they now owe Kraken money as a result of the flash-crash.
“Somehow I now owe them 120 dollars. How does an account go into the negative? I had plenty in margin to cover all the other platform drops, but who can cover a 90 percent bogus drop?” they said.
Despite calls for compensation for the flash-crashes from Kraken’s users, social media commentary suggests the exchange will not be refunding traders for their losses.
Heard back from kraken support and they said they have 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 derivatives platforms have long used an index price to determine margin calls.
While other platforms similarly suffered sharp flash crashes, with Ether in particular falling on Nexo, The trading platform has indicated on Twitter they will refund users for losses incurred during the dip:
A service disruption at an exchange partner’s end resulting in trading anomalies has led to some Nexo clients’ ETH balances getting incorrectly liquidated. These liquidations will be reversed. We apologize & will keep you updated.
Your funds are safe.
— Nexo (@NexoFinance) February 22, 2021
Liquidations have not been rare amid the recent crypto price volatility. On Feb. 15, a roughly 11% drop in the price of Ether caused $1.89 billion worth of liquidations across the broader crypto markets. The majority of sa liquidations took place on Binance, with $336 million worth of Ether and $55 million worth of BTC being wiped from users’ balances.
Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Brian Quarmby
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