Kraken users on Reddit intend to formulate a class-action lawsuit due to losses they claim were incurred in a flash crash on Feb 22.
A couple of Kraken price pairs deviated from the market value. ETH crashed by $400 from $1,940, while ADA and BTC also saw price dips that didn’t match the market.
Luca Maziere, one of the traders, said that he had lost 46 ETH, adding that several other people also lost their investments.
A Reddit thread features many complaints, with users like DumbestStableGenius commenting that they had lost 50% of their account in the crash. StableGenius further displayed interest in joining or creating a class action suit against the flash crash incident.
Another user, Abvhfhdxr, stated that he got liquidated with a leverage of 1.5! and has a negative balance now. He enquired what action he could take about this illegal issue.
Lawsuit Over Flash Crash
Several traders have threatened to form legal action against the exchange, with Reddit-user”dtk6802” claiming to have lost most of his life savings amid the flash-crash. He added that he hadn’t received a response from a human.
He thought they would refund or they would lose all their customers. He said that he was sick to his stomach but will join the lawsuit with plenty of proof (screenshots) if not compensated.
Kraken has reportedly denied responsibility in an email sent to one trader, noting that sometimes Kraken trades higher than other exchanges and sometimes lower.
Many crypto derivatives platforms have long used an index price to determine margin calls to protect against wholesale liquidations in the event of sudden and localized flash-crashes.
Kraken is a trading platform based in California. It was founded in 2011; it’s one of the trading platforms with the highest ranking in the cryptocurrency community. Kraken offers several trading features and accepts both cryptocurrencies and fiat currencies like euros, dollars, pounds, including others. There are more than 38 trading pairs that Kraken operates.
Kraken is also a secure platform featuring a two-factor authentication process. This platform offers some of the lowest processing fees on the market, ranging from 0 to 0.36%. Except for the internet platform, Kraken also has a mobile version app that customers can download on their smartphone device, free of charge.
Liquidations have not been rare amid the recent crypto price volatility. An almost 11% drop in Ether caused $1.89 billion worth of liquidations across the broader crypto markets a week ago. The majority of liquidations took place on Binance, with $336 million worth of Ether and $55 million worth of BTC being wiped from users’ balances.