Cryptocurrency exchange OKX has announced plans to compensate users impacted by a sudden flash crash in its OKB token on January 23.
The crash occurred around 9 am GMT on Tuesday, with OKB’s price plummeting 48% from $46.80 to $25.10 in less than 15 minutes. This drop erased $6.5 billion in diluted market capitalization before the token recovered. As of the report’s publication, OKB was trading at $45.94.
OKX staff explained that the crash was triggered by the liquidation of several large leverage positions at $48.36 USDT, causing a domino effect in the market. This led to a sharp price fall, triggering further liquidations across various transactions. To address the issue, OKX committed to fully compensating users for any additional losses caused by this abnormal liquidation, with a detailed compensation plan to be introduced within 72 hours.
The cryptocurrency market experienced significant price fluctuations on the same day. This was partly driven by Grayscale Bitcoin Trust’s (GBTC) sale of Bitcoin to fulfill investor redemption demands on its ETF. Notably, FTX, a troubled cryptocurrency exchange, liquidated nearly $1 billion in GBTC ETF shares as part of its estate liquidations to repay creditors.
OKX has been concentrating on meeting regulatory standards over the past year. On December 29, 2023, the exchange decided to delist several privacy-focused cryptocurrencies, including Monero (XMR), Zcash (ZEC), Dash (DASH), and Horizen (ZEN), due to compliance concerns. Additionally, on January 2, OKX introduced new requirements for UK users to align with the Financial Conduct Authority (FCA) regulations, including mandatory risk assessment questionnaires for new traders.
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