Feb. 22 saw the single largest daily candle in the history of both Bitcoin (BTC) and Ether (ETH) 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.
Nonetheless, it seems 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.
According to Cointelegraph, 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 u/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.”
Nonetheless, the fallout appears for some has extended beyond losses and into debt, with Reddit-user u/GoEers304 alleging their balance shows 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?”
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.
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 noted on Twitter they will refund users for losses incurred during the dip.