An erroneous value used for the BTC/USD rate resulted in major losses to traders on Deribit exchange. The exchange has assured refunds to the affected traders.
On Thursday, October 31, Bitcoin witnessed a major flash crash to $9000 levels on two exchanges – Coinbase Pro and Deribit. On Thursday, at 19:55 UTC, BTC spot price crashed from $9260 to $9055 in a short span of time.
Just within an hour later, futures and options exchange, Deribit saw BTC futures dropping from $9150 to $7720. However, in just a few minutes BTC price bounced back to $9000. However, this rapid price fluctuation in BTC caught traders’ attention as multiple orders were executed during this time.
One crypto trader ‘Cryptoboy’ slammed Deribit for telling its customers that he exchange will not roll back the trades but they should manage their positions accordingly. The trader tweeted:
From the desk of #deribit
“Trades will not be rolled back Please manage your positions accordingly” LOL
It’s over. I would withdraw all funds and never use tnis exchange again If I was a user. pic.twitter.com/QJ2SwVWLxe
— Cryptoboy™️ (@Crypto_Boy1) October 31, 2019
The derivatives market underwent major shockwaves as BTC price crashed below $8000 levels. On the other hand, liquidations hit the roof on the BitMex crypto exchange.
Deribit Takes Corrective Measures
As the news got popular, Deribit announced some corrective measures to rectify its mistake and compensate the users. In another message, the exchange also explained that the issue arose from an erroneous value that shouldn’t have been used for calculating the BTC/USD rate.
Deribit exchange accepted its mistake and assured refund to all the affected traders. “An outlier should have been excluded from the index, therefore it’s refunded by the firm,” it reads.
Deribit’s corrective measure includes changing the price of stop-loss trades to a fixed BTC level, based on the price. The exchange said:
“Equity will be brought back to the pre-incident level, around index price $9,160. Deribit will reimburse over $1.3 million in losses from the BTC index calculation data issue around 21:00:00 UTC on October 31, 2019. The Deribit Insurance fund will not be used to cover these losses, but compensation will be covered by Deribit.”
In addition to Deribit, Coinbase Pro users also experienced issues as the users’ stop-loss orders were “deleted” just before BTC sharp price crash from $9260 to $9055.
However, after yesterday’s event, the BTC price has recovered back and is currently trading at $9180 with a market cap of $165 billion. After a short glitch at the exchanges, things seem to have resumed back to normalcy today.
In the last one week, Bitcoin has shown a major recovery in its price. After making a low of $7500 on October 24, the Bitcoin price surged 20% the very next day moving past $9000 levels.
