A Crypto Trader Lost 20,000 ETH Due to OKEx Malfunction
A crypto trader on cryptocurrency exchange OKEx claimed to lose 20,000 ETH (worth more than $5.1 million at that time) during the unexpected massive crypto drop on September 5. It happened in 23 minutes only for the malfunction of the exchange’s app, which, in fact, could be avoided.
OKEx, the world’s second largest cryptocurrency exchange by trading volume, has again shown what a minefield crypto could be.
Searching OKEx on Baidu (China’s Google), the first popping up is news related to accounts on OKEx being wiped out in futures trading in the “March incident” – massive complaints about forced liquidations and irregular transactions.
People fed up with OKEx’s regular abnormality complained that the crypto exchange seems to like “cutting leeks” (a metaphor for retail investors leave after suffering great loss and more naive newbies will spring up ready for being “harvested” again and again) every month.
“Shortly in 23 minutes, OKEx made me lose 20,000 ETH. Calculated by the ETH price at $252 per coin, it was worth more than $5.1 billion at the time of 18:00 (GMT+8) on Sep.5.” a trader by the pseudonym of Li Xiao said with anger and resignation.
Many traders were affected by the latest crypto drop. They tried to prevent the loss, but stopped by OKEx’s technical bugs, service unavailable, bad gateway, unable to login, no position, etc. These investors who were “violently robbed” by OKEx soon gathered together to express their vociferous protestations.
Customer service staff at OKEx replied hours later, saying their service went down for overwhelming users flooded in at that time. In response to the incident, OKEx says they are still investigating the reasons for the abnormality.
While a user surnamed Wang said it was not persuasive as transactions going short could been seen crazily increasing at that night.
“I cannot accept it. If the system works, I would not lose so much. We just want OKEx to return our money.”
In late July, an unusually large position of 4.16 million bitcoin futures has triggered the risk management system at OKEx, which led to the exchange to gather funding from users who profited across those contracts. After the incident, OKEx said it would enhance its risk management measures to prevent a reoccurrence, while it seems few improvements related to its much-maligned futures trade has been made so far.
Outsiders question why these eager crypto traders stick to betting on risky margin on exchanges with bugs. For a start these crypto exchanges have moved offshore, and it is hard to say futures transaction is illegal as crypto-to-crypto leverage trade actually involves no fiat currency in liquidation; more importantly, these investors fantasy they would be the next legendary crypto billionaire and not like to let the opportunity go. Soon they’ll forget the painful memory.