On February 22 on the Kraken platform, Ether (ETH) experienced a flash crash, dropping from $ 1,600 to $ 700 in the space of a few minutes. This sudden fall having angered users, Kraken compensates part of the losses of those who want it.
Kraken compensates victims of the Ether flash crash
On February 22, the entire cryptocurrency market experienced a significant correction, supported by a downward movement in the heart of Bitcoin (BTC). The vast majority of cryptocurrencies have followed suit, including Ether (ETH).
This correction spanned several hours, and the price of Ether fell from $ 1,800 to almost $ 1,500 at its lowest point on all platforms except one: Kraken .
On the Kraken exchange, which is nevertheless considered an industry benchmark, Ether was hit by a flash crash of incredible power . In just a few minutes, ETH’s price on Kraken plunged, hitting $ 700 .
Kevin Lu, blockchain analyst for analysis firm CoinMetric, summed up the situation in a tweet. We can see a superposition of the course of Ether on several platforms. Represented in pink, we notice that only Kraken was affected by a flash crash .
Stunned, the cryptosphere then accused Kraken and its systems of having been affected by a technical failure, which would have caused this flash crash. Quickly, Kraken denied these accusations and ensured that its transaction processing device worked properly during the fluctuation in the price of ETH.
In fact, this impressive drop was probably caused by a series of sell- offs on margin positions and the triggering of serial stop losses. Although Kraken claims not to be involved, the anger of investors was so great that the platform decided to compensate them.
According to a New Money Review media report , Kraken customers affected by the flash crash were offered compensation ranging from 5 to 50 percent of their total losses .
But is it really Kraken’s fault?
Kraken co-founder CEO Jesse Powell was quick to respond to some users‘ dissatisfaction on Twitter by suggesting that users don’t use leverage if they don’t understand the underlying risks.
“Our job is to secure your funds, not tell you how to trade. Don’t trade with leverage if you don’t understand the risks. “
Jesse Powell maintains his position, and insists that Kraken is not the source of the problem. In another series of tweets , he nevertheless explains the company was taking funds out of its pocket to support the victims of the flash crash in order to retain and retain its customers.
The mystery still remains to this day, even if the crypto-community remains convinced that the fault lies with Kraken. Moreover, Ether is not the only cryptocurrency to have been hit by a flash crash.
Indeed, in parallel with Ether, the ADA of the Cardano blockchain has also experienced an unprecedented drop, dropping from nearly $ 0.80 to $ 0.10 on Kraken over the same time horizon. Likewise for Polkadot’s DOT, which suffered a $ 30 drop to nearly $ 15 . Speaking up for users while highlighting other flash crashes, Kevin Lu added:
“Since a lot of their markets have been affected, this really indicates some malfunction in their order comparison engine – not price manipulation or [user] mishandling. „