Kraken users to file lawsuit over flash crash liquidations
Recently, Kraken users on Reddit are planning to launch a class-action lawsuit due to losses they claim were incurred in a flash crash. On Feb 22., various Kraken price pairs differed from the market value. Ethereum dropped to approximately $700, notwithstanding the market value is about $1,600. Also, ADA and Bitcoin witnessed price drops that didn’t meet the market. Nevertheless, it seems that a mixture of weak buy support and cascading liquidations occurred in hefty losses on Kraken, with Bitcoin dropping by 22% to less than $45,000. In comparison, ETH decreased by 64% to get support at just $700.
For the uninformed, a flash crash occurs when an asset’s price increases and decreased by a large magnitude in seconds. These events view the liquidations of various traders who’ve speculated on the price moving in the opposite direction, given they employ a derivatives platform. But, they can also profit traders who have set low purchasing orders. As the price is likely to have them loaded on the way down, outlining extensive gains as it recovers.
Traders voice their frustrations over Kraken’s flash crash liquidations
However, the public response to subreddit r/Krakensupport has witnessed several traders venting out their frustrations. Some traders are even warning to settle legal action against the exchange. A Reddit-user “dtk6802” is pretending to have spent most of their life savings between the flash-crash. Moreover, a Reddit thread highlighting user u/DumbestStableGenius declared that they had lost 50% of their account in the crash. Kraken has reportedly refused obligation in an email sent to one trader. It advocates that sometimes Kraken trades higher than other exchanges and sometimes lower.
Notwithstanding requests for compensation for the flash-crashes from Kraken’s consumers, social media analysis implies that the exchange will not be refunding traders for their losses. Furthermore, Kraken declared that the staff is recently reviewing the market movements through the crash, ensuring an update with more data in the future. Liquidations have not been extraordinary between the current crypto price volatility. On Feb 15, an 11% drop in Ether’s price generated $1.89 billion worth of liquidations over the broader crypto markets. Moreover, maximum liquidations took place on Binance, and it wiped $336 million worth of Ether and $55 million worth of BTC from users’ balances.