Key Insights
- OKX token crashed 48% to $25 in 15 minutes due to cascading liquidations but swiftly recovered.
- OKX exchange pledged to fully compensate users for additional losses beyond token price drop.
- Flash crash wiped out $6.5 billion in temporary market value of native OKX exchange token.
SINGAPORE – Cryptocurrency exchange OKX said it will fully compensate users impacted by Tuesday’s flash crash in its native OKB token, which plunged as much as 48% within 15 minutes due to cascading liquidations.
The token was trading around $45.94 on Wednesday after the swift recovery. But OKX said “abnormal liquidations” during the crash caused additional losses for some users when multiple large leveraged positions were force-closed.
“OKX will fully compensate users for additional losses caused by abnormal liquidation,” the exchange said in a statement, adding that a detailed compensation plan would be launched within 72 hours.
OKB, the native token of one of the world’s major crypto trading platforms, lost nearly $6.5 billion in market value during the crash from around $46.80 to $25.10, based on diluted market capitalization.
Our team is investigating the recent okb price volatility. We will report to the community later. pic.twitter.com/UI9uPgQfA5
— Star (@star_okx) January 23, 2024
Analysts pinpointed the trigger as liquidations of large leveraged positions once OKB slipped below a key support level. That triggered further liquidations of collateralized loans in a cascade of selling as the token plunged.
Tuesday’s volatility came as cryptocurrencies were whipsawed by news of major Bitcoin sales linked to the collapsed FTX exchange’s ongoing bankruptcy proceedings.
OKX has focused heavily on regulatory compliance after a rocky 2022 for the crypto industry, delisting privacy coins in late December. The exchange is also implementing new safeguards for UK users to adhere to local market rules.
While crypto prices swung this week, OKX demonstrated its commitment to making users whole after its own technology issues contributed to painful losses.