Kraken users consider lawsuit following flash-crash liquidations
- BTC and ETH shed a good percentage with 24 hours, but Kraken exchange users were worse hit.
- A combination of dropping liquidations and weak buy support led to the heavy losses experienced on Kraken.
- Kraken has denied responsibility and users may likely not get compensation for their losses.
Kraken users are considering filing a lawsuit to reclaim their funds after the liquidation of leveraged trades on the exchange. A sharp localized flash crash on Kraken caused the users on the platform to lose more than the actual market loss in other crypto exchanges.
On February 22, the largest daily candle was recorded in the history of Bitcoin (BTC) and Ethereum (ETH). The largest crypto asset dropped about $9,500 to close at $57,500. On the other hand, ETH dropped to $1,950 after shedding $400 within 24 hours on the Coinbase exchange.
Kraken users were worse hit
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Kraken exchange had a higher loss. It seems that a combination of dropping liquidations and weak buy support led to the heavy losses experienced on Kraken. ETH fell to $700 which is a 64% drop. On the other hand, BTC shed 22%, hitting below 22% on the exchange.
As a result of the massive drop, several marketers voiced their frustrations on the exchange, as some have threatened to file a lawsuit following the flash crash.
One Reddit user “dtk6802” claimed he had lost most of his savings following the flash crash.
Another user Luca Maziere claimed he had lost 46 ETH, and stated that many other users have lost huge amounts of their investments as well.
“If anyone is wanting to join or form a class action lawsuit, I would be highly interested,” Maziere stated.
Another user Abvhfhdxr said he now has a negative balance after getting liquidated with a leverage of 1.5. He added that the whole scenario doesn’t seem legal to him.
Kraken has denied responsibility
In an email sent to a trader, Kraken denied being responsible for users’ losses
“Sometimes Kraken trades higher than other exchanges and sometimes lower,” the exchange stated in the email.
Another user said his life savings are gone because of the flash-crash and he hasn’t received any message from the platform. He also indicated interest to join the lawsuit.
While there have been calls from several users for compensation, it appears Kraken will not take that route, as the exchange has already denied responsibility.