Several traders were beside themselves earlier this week as they got ‘Bitmex’d’. BitMEX experienced a 60% flash crash in a single candle. This saw many traders suffer liquidation. But as crypto users continue to cry foul, BitMEX has persisted that it had nothing to do with it. Earlier today the exchange has shared more details.
First, what went wrong? On Thursday, a number of BitMEX clients started pointing out on Twitter that their stop losses did not trigger when XRP fell by 58%, notably, on BitMEX only. Many analysts while sympathizing with the traders who lost big, bashed the exchange for letting this happen. In the hours that followed, the exchange made it clear that the flash crash was a result of market factors.
WTF. FUCK YOU BITMEX. This is really not okay! My stop didn´t trigger and my entire bitmex account is fucking gone. Fuck you! pic.twitter.com/WHXbJoiTvL
— Marc de Koning (@Koning_Marc) February 13, 2020
Of course, it did not help that the exchange CEO Arthur Hayes had earlier made a blatant comment about XRP. This made a number of traders skeptical that the flash crash could have been caused by the exchange. In all this, it is important to note that long contracts remained active after the crash with their assets not liquified. Here is the full coverage of the story.
Now BitMEX has come out with a stronger statement about the event. They note that they have tested their systems and they did prevent the liquidation of users’ XRP assets.
We understand traders’ frustration when prices move quickly against their positions. However, we’ve investigated recent activity on our XRPUSD perp and our system performed as expected and prevented liquidations.
The exchange says that the systems, as designed, prevented a liquidation on the set market orders as set by users. this is set to trigger on the last price. They further note that there was no liquidation on XRPUSD 14:00-14:02 UTC as reported by some traders.
The exchange continues to explain about their pioneering Fair Price Marking system that was designed to prevent liquidation.
“No market can guarantee protection against sharp movements for all users under all circumstances. We pioneered the Fair Price Marking system and designed it to protect users from liquidation in this scenario. For stops, users may select which trigger to use at their discretion.”
The exchange has also explained to users about the Last price of which may be, its lack of understanding could have led to the events.
“Last Price-triggered stops are vulnerable to fast market moves. A Stop Market executes the whole order at the best available price. Stop Limits limit execution price, but may not fill the whole order; Fair or Index Price triggers aren’t directly affected by the Last Price.”
A majority of those commenting on BitMEX’s latest updates say they are unconvinced. They are sticking to the narrative that this crash was orchestrated.
Whether it was or not, client trust with the exchange has hit an all-time low with many of its users threatening to close accounts.
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John is an outstanding writer with a great love for cryptocurrency and its underlining technology. Kiguru is an astute believer in cryptocurrency and blockchain technology and looks up to exploring digital innovation. Follow him on Twitter @Shawn254Guru