Kraken users are demanding compensation after a flash-crash triggered wholesale liquidations while the exchange was inaccessible to users.
February 23, 2021 | AtoZ Markets – Kraken users are clamoring for compensation, after the exchange's violent flash crashes led to the liquidation of leveraged trades, right during the sharp retracements of the crypto markets on February 22.
The single largest daily candle in the history of Bitcoin (BTC) and Ether (ETH) appeared yesterday by linear value: BTC which fell by about $9,500 from $57,500, while on Coinbase the ETH fell by $400, from $1,940, over 24 hours.
However, it appears that the combination of poor buying support and cascading liquidations led to particularly heavy losses on Kraken, with BTC falling 22% to under $45,000, while ETH fell 64% to the support area of $700 .
On the r/Krakensupport subreddit, many traders have expressed their frustration, and some users are even threatening to take legal action against the exchange. User u/dtk6802 claims to have lost most of his life savings due to the flash crash:
"I lost most of my life savings and didn't get a single response from a human. I thought they would pay us back, thinking they would lose all their customers. This makes me feel terrible, but I'll join the cause. with lots of proofs (screenshots) if we don't get your money back. "
However, for some it was even worse: user u/GoEers304 wrote that, as a result of the flash-crashes, he is now owed money to Kraken:
"Somehow now I owe them $ 120. How does an account go negative? I had a lot of leeway to cover all the other drops on the platform, but who can cover a bogus 90% drop?
Despite Kraken's user complaints, social media comments seem to suggest the exchange will not reimburse traders for their losses:
"From Kraken's support they told me this thing is out of their control. No refunds."
Kraken wasn't the only platform to suffer sharp crashes: in particular, Ether dropped a lot on Nexo too. However, the company announced on Twitter that it will reimburse users for losses incurred during the crash:
An interruption of the service in one of our partner exchanges caused trading anomalies, which led to the erroneous liquidation of several ETH balances of our customers. These liquidations will be reinstated. We are very sorry for this, we will keep you updated.
Your funds are safe.
Liquidations were not uncommon in the face of recent price volatility. On February 15, a roughly 11% drop in the price of Ether caused $1.89 billion in liquidations across all crypto markets. Most of the liquidations took place on Binance: $336 million of Ether and $55 million of BTC written off from user balances.
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