OKX users will get compensation after the exchange's native token rapidly lost half its value.
On Tuesday, January 23rd, 2024, the price of OKB, the native token of the popular cryptocurrency exchange OKX, suddenly crashed over 48% within 15 minutes. The price plummeted from around $46.80 down to $25.10 before rapidly recovering.
According to a statement released by OKX, the flash crash was triggered by the automatic liquidation of multiple large leveraged positions after OKB had initially dropped from $50.69 to $48.36. This cascading liquidation led to further liquidations of collateralized loans, margin trades, and cross-currency transactions on the exchange. Over $6.5 billion in diluted market capitalization was briefly wiped out before prices rebounded.
OKX attributed the high volatility to the overall downtrend in cryptocurrency markets that day, which also saw Bitcoin shed 3% and Ethereum lose 6% amid a wider selloff. However, the exchange acknowledged that the scale of the OKB crash was abnormal and necessitated additional risk management controls to prevent recurrences.
In a move considered rare for the volatile crypto industry, OKX pledged to "fully compensate users for additional losses caused by abnormal liquidation." The exchange said it is working on formulating a specific reimbursement plan for affected customers using features like flexible loans, margin trading, and multicurrency trading. The compensation details are expected within 72 hours.
