Thursday, February 25, 2021
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‘Extreme Selling’ Caused Kraken Ethereum Flash Crash

Jesse Powell, CEO of Kraken. Source: a screenshot, Instagram/krakenfx

“Extreme” ethereum (ETH) selling caused yesterday’s flash crash to USD 700 on Kraken, according to Jesse Powell, CEO and Co-founder of the crypto exchange giant.

The CEO was speaking to Bloomberg TV, and claimed that his firm was “in the process of investigating” the incident.

However, Powell claimed,

“There doesn’t seem to be any evidence of a trading engine malfunction. It seems like trades processed accurately.”

The news will raise eyebrows across the crypto sector – particularly in the light of two gigantic liquidations that also took place early this week.

Worryingly for some, he conceded that another whale may have decided to liquidate. He said that “some people” had perhaps decided “to take some money off the table. He added,

“It could be that a single whale just decided to dump [their] life savings.”

Powell mused that the ETH crash was “probably not tied” to Tesla-related news, but conceded, “You never know what moves these markets.” As reported, this past weekend, Tesla’s Elon Musk said that “BTC & ETH do seem high.”

And Powell said that rolling back trades was an unlikely scenario, although he did not rule out compensatory measures of some kind could be in store for customers who were negatively affected. He added,

“We may end up doing something for these people. We’re looking into it.”

On the Kraken Support subreddit, users indicated they would not be so easily appeased, however.

One claimed that they “got liquidated with a leverage of 1.5,” while another asked if anyone else was “wanting to join” them to “form a class action suit,” alleging they had lost “50%” of their “account’s worth” in the flash crash.

On Twitter, some were clearly not ready to be placated, as customer raged at Kraken’s support staff,

“You forcefully liquidated my position at a false price while the app and site were non-functional. You need to refund our money!”

At the time of writing (14:31 UTC), ETH trades at USD 1,556, rebounding from USD 1,395, reached earlier today. The price is still down by 8.5% in a day and 12% in a week, trimming its monthly gains to 26%.

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Learn more:
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