OKX to Compensate Users After Flash Crash in OKB Token
Cryptocurrency exchange OKX has announced that it will fully compensate users affected by a flash crash that occurred on January 23rd. The crash caused the price of its platform’s native OKB token to rapidly plunge from $48 to $25 in minutes.
The incident was outlined by OKX in an X thread, with the exchange stating that:
- The flash crash was triggered by the overall downward trend in the crypto market.
- OK mentioned that it led to a cascade of liquidations across leveraged positions, loans, and margin trades linked to OKB.
- This cascade caused the price of OKB to fall dramatically within a short period before recovering.
- OKX apologized for the losses and impacts caused and announced compensation plans.
Specifically, OKX revealed that the exchange will compensate users for “additional losses caused by abnormal liquidation,” covering pledged lending, margin trading, and cross-currency transactions. OKX CEO also took to X to share details of the token crash.
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OKX exchange will share a compensation plan in 72 hours
A specific compensation plan will be shared within 72 hours. OKX will optimize systems and mechanisms related to leverage limits, risk control, and liquidation to prevent similar incidents.
Details on planned improvements:
- Adjust spot leverage gradient levels to reduce cascade liquidation risk.
- Enhance risk control rules around pledged lending.
- Improve liquidation mechanisms to minimize price impacts.
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While specifics are yet to be released, the promise of covering losses incurred due to the platform’s liquidation protocols will likely be welcomed by affected users. However, the incident may raise concerns over the risks associated with crypto leverage trading.
With leverage increasing exposure and compounding losses in volatile markets, flash crashes can rapidly wipe out positions. While compensation helps users recover, preventing recurrences through systemic improvements will be important for OKX to maintain trust and volumes going forward.
