OKX Pledges Compensation after OKB Token's $6.5 Billion Market Cap Loss in Flash Crash
Summary:
OKX, a cryptocurrency exchange, has pledged to reimburse users affected by a sudden 48% drop in the value of its OKB token. The OKB crash and quick recovery wiped out $6.5 billion in market cap. The fall was triggered by the liquidation of large leverage positions. The exchange is committed to compensating users for any additional losses and will announce an official plan within three days. Amid this, the crypto market saw sweeping price volatility, including the significant sell-off of Bitcoin by the Grayscale Bitcoin Trust and troubled crypto exchange FTX. OKX, which has been concentrating on regulatory compliances, recently introduced additional trading requirements for UK users and delisted several privacy-focused coins.
Users impacted by a precipitous drop in the value of OKB, the proprietary token of cryptocurrency exchange OKX, will receive compensation from the exchange. On a Tuesday morning at approximately 9 am GMT, OKB witnessed a significant reduction in value, plummeting 48% from $46.80 to $25.10 within a brief 15-minute window. This abrupt decrease slashed $6.5 billion off its diluted market cap prior to its swift bounce back. As of press time, the token's trading value stands at $45.94. OKX representatives stated that the price started to crumble following the liquidation of several large leverage positions after the token hit $48.36. This cascaded into a market impact that sent the currency's price into a downward spiral. It also sparked the liquidation of collateral loans, leverage deals, and cross-currency transactions, resulting in the token's price dropping to $25.10. OKX has committed to providing "full compensation for further losses borne by users due to irregular liquidation" and will detail the compensation plan within three days. On the same day, the overall crypto market also saw intense price volatility. One factor was the selling off of Bitcoin (BTC) by Grayscale Bitcoin Trust's (GBTC) to satisfy investor redemption requests for its exchange-traded fund. The troubled crypto exchange FTX, a single entity, put almost $1 billion of GBTC ETF shares up for sale as it initiated estate liquidations to pay back its creditors.
Over the last year, OKX has primarily concentrated on regulatory compliances. On December 29, 2023, the exchange took a decision to eliminate several privacy-focused coins including Monero, Zcash, Dash, and Horizen. Subsequently, on January 2 of this year, OKX introduced supplementary requirements for UK-based users to adhere to new directives set by the Financial Conduct Authority (FCA). This included mandating users to fill out risk assessment surveys before they started trading. Related: An agreement between OKX and McLaren receives a nod once more as Formula 1 keeps luring crypto firms.
Published At
1/23/2024 6:08:14 PM
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