Cryptocurrency Exchange OKX’s Native Token Plummets by 50% in Minutes
OKX cryptocurrency exchange has announced plans to address the recent sharp decline in its native token, OKB, in the wake of an unexpected market event.
This follows a significant drop in OKB’s value on January 23, causing concern among investors and traders.
In a swift and dramatic turn of events on January 23, OKB’s value plummeted by 48% from $46.80 to $25.10 within 15 minutes. This sudden downturn resulted in a substantial $6.5 billion loss in diluted market capitalization. Despite the setback, the token quickly rebounded to a trading value of $45.94.
OKX attributes the sudden drop to the liquidation of large leverage positions, triggering a cascading effect that further reduced the token’s price due to market impacts. Pledged loans, leverage transactions, and cross-currency transactions were subsequently liquidated.
In response to the flash crash, OKX has committed to fully compensating users for any additional losses resulting from abnormal liquidation. A detailed compensation plan is expected within the next 72 hours, signaling a strategic effort to restore user confidence and stabilize market sentiments post-incident.
This compensation initiative by OKX reflects a broader industry trend where exchanges increasingly take responsibility for shielding users from market irregularities and technical glitches, crucial in an industry known for volatility and inherent risks.
The OKB flash crash occurred against the backdrop of significant market movements, including Grayscale Bitcoin Trust (GBTC) selling a substantial amount of Bitcoin (BTC) to meet investor redemption demands. FTX, another troubled cryptocurrency exchange, sold nearly $1 billion worth of GBTC ETF shares as part of estate liquidations for creditor repayment.
READ MORE: Grayscale Dumps $2.14 Billion in Bitcoin Holdings
OKX has proactively enhanced regulatory compliance in response to market dynamics. In December 2023, the exchange delisted privacy coins, including Monero (XMR), Zcash (ZEC), Dash (DASH), and Horizen (ZEN), aligning with global regulatory trends focusing on anti-money laundering (AML) and know-your-customer (KYC) regulations.
Further compliance measures were implemented on January 2 for UK users, aligning with new Financial Conduct Authority (FCA) requirements. These included mandatory risk assessment questionnaires, underscoring OKX’s commitment to regulatory adherence and user safety.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
