Cryptocurrency exchange OKX has announced a compensation plan for users who suffered losses during a flash crash of its native token (OKB) on January 23. The incident, which occurred around 9 am GMT, saw the price of OKB plummet by 48% from $46.80 to $25.10 within a span of fewer than 15 minutes. The rapid decline resulted in a substantial loss of $6.5 billion in diluted market capitalization, followed by a quick recovery. At the time of publication, the OKB token is trading at $45.94.
According to OKX staff, the flash crash was triggered by the liquidation of multiple large leverage positions after reaching a peak of 48.36 USDT.
The ensuing market impact led to a cascading effect, causing the currency price to fall further. This, in turn, triggered liquidations of pledged loans, leverage transactions, and cross-currency transactions, ultimately bringing the price down to $25.10 USDT.
OKX Pledge to Fully Compensate Users
In response to the incident, OKX has committed to fully compensating users for any additional losses resulting from abnormal liquidation. The exchange plans to unveil a specific compensation plan within the next 72 hours, providing affected users with clarity and assurance regarding their financial losses.
Market Turbulence Amidst GBTC Sale
The flash crash on OKX coincided with significant market turbulence on the same day, driven in part by the Grayscale Bitcoin Trust’s (GBTC) sale of Bitcoin to meet investor redemption demands for its exchange-traded fund. FTX, a troubled cryptocurrency exchange, played a notable role by selling nearly $1 billion worth of GBTC ETF shares. FTX initiated these sales as part of estate liquidations aimed at repaying creditors. The combination of these events contributed to a day of heightened volatility across cryptocurrency markets.