Jesse Powell said that they are investigating, but have found no evidence of a malfunction. Users demanded compensation since their leveraged trades were settled automatically.
As the crypto markets crashed, the price of Ether (ETH) lost at least USD 400 of its value in less than 24 hours. The cryptocurrency of the Ethereum network had previously reached USD 2,000. However, its price fell sharply to USD 700 on the Kraken exchange, detaching from the general market.
Ether traded at 50% below the rest of the market for several minutes, according to data from Trading View. At the time, several users observed that the cryptocurrency was trading above USD 1,500 on Coinbase and other exchanges.
This kind of sudden crash on Kraken has occurred on other occasions, according to a 2018 report from Trustnodes. The document refers to the Ether flash crash that occurred on Kraken two years ago. Besides, it indicates that the drop could have been due to someone selling a large number of cryptocurrencies at a low price. This situation could have been accidental or intentional as the price later returned to normal levels in higher volumes.
The company did not explain at the time what caused the incident. Kraken CEO Jesse Powell recently said that the price change may have been due to the sell-off of assets. He does not believe that a malfunction of the platform’s trading engine had anything to do with it.
“We are investigating and there does not appear to be any evidence of a trading-engine malfunction,” Powell told Bloomberg television. “It seems that the processing of transactions occurred accurately. A single whale could have decided to dispose of his life savings.”
The executive said that the fall in the price of Ether affected many users due to the availability of margin trading. He also mentioned the stop-loss orders that the exchange trades with. This type of conditional order executes the sale of a certain asset if its price falls below the marked limit. “We are studying the possibility of doing something for these people,” he added.
What Really Caused That Incident on Kraken?
As a consequence of the incident that occurred on Kraken, several community members expressed their opinions on social media. Among them was Coin Metrics analyst Kevin Lu, who believes Kraken’s trading-comparison engine did malfunction.
Lu showed a graph indicating that the same thing had happened in the platform’s BTC/USD market. The only difference was that it did not happen in as extreme a way as with Ether. The incident on Kraken affected other markets such as Polkadot and Cardano. For that reason, some people believe that there are intentions to manipulate the Ether market.
Meanwhile, several users feel that they deserve compensation as their leveraged trades were automatically settled. They surely expect Kraken to reimburse them for the losses that they suffered, as Nexo did to its users after a sudden crash.
During this situation, Kraken remains one of the leading Ethereum 2.0 staking service providers. The exchange leads the group with a dominance of 14.8%, while Binance follows it with 11.1%. This alternative is leading users to make their Ether holdings available to platforms that pay them interest for their participation.
By Alexander Salazar
