Kraken CEO says that whales caused Ethereum’s 50% drop on the exchange when the price crashed from $1600 to $700 as we reported on the ethereum price news today.
The dive prompted numerous debates on whether this was a malfunction on the exchange but the dip was not an error and could have been caused by a whale trader as Jesse Powell noted:
“We’re in the process of investigating. There doesn’t seem to be any evidence of a trading-engine malfunction. It seems like trades processed accurately.”
He explained that the users’ losses could have been enhanced by the availability of the margin trading on the exchange which is a practice where customers use funds that are borrowed from a broker to trade:
“It could be that a single whale just decided to dump his life savings.”
ETH’s drop was a part of the huge market decline as BTC alone dropped by around $10,000 which was the biggest dip so far. Ethereum’s price didn’t fall as low as other major exchanges and traded at $1500. Whatever the case is, it was unlikely that Kraken retrospectively canceled the trades conducted on Monday as Powell noted making compensation to the affected traders that could ensue:
“We may end up doing something for these people. We’re looking into it.”
Kraken CEO says that the crypto market remains a risky and volatile place so the traders have to be prepared to lose some money:
“It’s still a bit of the Wild West. You still have to do your own research and learn how things work, and you’re kind of trading on professional mode on many of these venues.”
Monday’s market dip was triggered by the second biggest wave of liquidations in the ETH decentralized finance history with a total of $24.1 million worth of positions getting erased.
As reported recently, Kraken users demand compensation after the harsh flash crash localized to the exchange which resulted in leveraged trades that were liquidated amid the sharp retracements that were recorded across crypto markets. Yesterday, we saw the biggest daily candle in the history of bitcoin and ethereum when BTC dropped by almost $10,000 from its high of $57,500 while ETH dropped by $400 from $1940 within the span of 24 hours on Coinbase.