OKX exchange to compensate users after 48% token flash crash

Cryptocurrency exchange OKX will compensate users who were affected by a flash crash in its namesake token (OKB) on Jan. 23.

Around 9 am GMT on Tuesday, the price of OKB crashed 48% from $46.80 to $25.10 in less than 15 minutes, wiping out $6.5 billion in diluted market capitalization before a swift recovery. The token is trading at $45.94 at the time of publication.

“After touching 48.36 USDT, the liquidation of multiple large leverage positions was triggered successively,” OKX staff wrote. “In addition, the market impact caused the currency price to fall, further triggering the liquidation of pledged loans, leverage transactions, and cross-currency transactions, which ultimately caused the price to drop within a short period of time down to 25.1 $USDT.”

The exchange has pledged to “fully compensate users for additional losses caused by abnormal liquidation,” with a specific compensation plan to be launched within the next 72 hours.

On the same day, cryptocurrency markets experienced large price swings, driven in part by Grayscale Bitcoin Trust’s (GBTC) sale of Bitcoin (BTC) to meet investor redemption demands on its exchange-traded fund. One single entity, the troubled cryptocurrency exchange FTX, sold nearly $1 billion worth of GBTC ETF shares as it began estate liquidations to repay creditors.

Our team is investigating the recent okb price volatility. We will report to the community later. pic.twitter.com/UI9uPgQfA5

— Star (@star_okx) January 23, 2024

Crypto exchange OKX has been focusing much of its efforts on regulatory compliance for the past year. On Dec. 29, 2023, the firm announced it would delist several privacy coins, including Monero (XMR), Zcash (ZEC), Dash (DASH) and Horizen (ZEN). On Jan. 2, the firm announced additional requirements for United Kingdom users to comply with new Financial Conduct Authority (FCA) requirements, including the mandatory completion of risk assessment questionnaires before they can begin trading.

Related: OKX doubles down on McLaren deal as F1 continues to attract crypto firms