OKX cryptocurrency exchange intends to compensate users impacted by the recent flash crash of its native token, OKB. This announcement comes after the token’s value experienced a dramatic fall on January 23, causing widespread concern among investors and traders.

Sudden Decline in OKB Value

On the morning of January 23, OKB’s value plummeted dramatically, falling 48% from $46.80 to $25.10 in less than 15 minutes. This sharp decline resulted in a significant loss of $6.5 billion in diluted market capitalization. However, the token showed resilience, swiftly recovering to a trading value of $45.94 at the reporting time.

OKX staff explained the sudden drop due to the liquidation of multiple large leverage positions. The following chain reaction saw a further decline in the token’s price due to market impacts, triggering the liquidation of pledged loans, leverage transactions, and cross-currency transactions.

（1/2）由于1月23日市场整体行情下行，#OKB 价格同步波动，币价于 17:07:26（HKT）触及 48.36 $USDT 后，先后触发多个大额杠杆仓位的清算，加之行情影响使得币价下跌，过程中进一步触发了质押借贷、杠杆交易及跨币种交易的清算，最终导致价格在短时间内下跌至 25.1 $USDT ，目前币价已经恢复正常。 pic.twitter.com/Y04BSaCMo6

— OKX中文 (@okxchinese) January 23, 2024

In response to the turmoil caused by the flash crash, OKX has committed to fully compensating users for any additional losses incurred due to abnormal liquidation. The exchange has assured its users that a specific compensation plan will be developed and released within the next 72 hours. This move is seen as a step towards maintaining user trust and stabilizing market confidence after the incident.

OKX’s decision to provide compensation follows a broader trend in the crypto industry, where exchanges increasingly take responsibility for protecting their users from market anomalies and technical glitches. This approach is crucial in an industry known for its volatility and inherent risks.

Broader Market Movements and OKX’s Regulatory Compliance Efforts

The OKB flash crash occurred against significant movements in the broader cryptocurrency market. Notably, the Grayscale Bitcoin Trust (GBTC) sold a substantial amount of Bitcoin (BTC) to meet investor redemption demands on its exchange-traded fund. This event was part of a larger market trend. FTX, a troubled cryptocurrency exchange, sold nearly $1 billion worth of GBTC ETF shares as it commenced estate liquidations to repay creditors.

With these market dynamics, OKX has been enhancing its regulatory compliance. In December 2023, the exchange announced the delisting of several privacy coins, including Monero (XMR), Zcash (ZEC), Dash (DASH), and Horizen (ZEN). This move aligned with global regulatory trends, where exchanges are scrutinized for compliance with anti-money laundering (AML) and know-your-customer (KYC) regulations.

Furthermore, on January 2, OKX introduced additional requirements for United Kingdom users to align with new Financial Conduct Authority (FCA) requirements. These measures included mandatory completion of risk assessment questionnaires before allowing users to trade, demonstrating OKX’s commitment to regulatory compliance and user safety.

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The post OKX Announces User Reimbursement Following OKB Price Plunge appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am