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OKX token’s 48% flash crash

Cryptocurrency exchange OKX briefly experienced a 48% flash crash of its native token, OKB, on Jan. 23.

In less than an hour’s time, around $6.5 billion in diluted market capitalization was wiped out before the token recovered its losses. OKX reported that an overall market sell-off on the day of the incident triggered “the liquidation of multiple large leverage positions,” which was then exacerbated by the liquidations in “pledged lending, margin trading and cross-currency transactions.”

The price of OKB tokens fell from $48.36 to $25.10 within minutes before rebounding. At the time of publication, OKB tokens are trading at $48.77. 

In a post-mortem update, the firm disclosed that liquidations were triggered by “50.69 to 48.36 USDT” in OKB, or less than a 5% price move. The exchange has since pledged to reimburse users for all OKB-related losses caused by the flash crash.

“We will further optimize spot leverage gradient levels, pledged lending risk control rules, liquidation mechanisms, etc., to avoid similar problems from happening again,” OKX said. “We understand this situation is unusual and apologize to impacted users.”

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Author: Zhiyuan Sun

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