Kraken to compensate users harmed by sharp drop in Ethereum price

The cryptocurrency exchange Kraken will partially reimburse losses of users affected by the sharp drop in Ethereum price at the start of the week.

On February 22, ETH price on Kraken briefly fell from around $1,700 to $700.

Liquidity in the platform’s order book briefly dried up.

After reviewing the issue, the exchange’s team concluded that the trading engine was “processing orders correctly”.

The exchange’s chief executive, Jesse Powell, wrote that the price drop was driven by strong selling pressure. He also urged users not to trade on margin if they do not understand the associated risks.

Yes. Our job is to secure your funds, not to tell you how to trade. Please don’t trade on leverage if you don’t understand the risks.

— Jesse Powell (@jespow) February 23, 2021

According to New Money Review, the company did decide to compensate the affected users. The compensation amount will range from 5% to 50% of the lost amount.

On February 26, Powell wrote that, to preserve the client base, the company “will put money from its own pocket” to help some people out for the sake of client retention.

Hey, Paul. You’re right that we don’t make markets on the exchange. Trades were all user-user and matching worked as expected. We’re coming out of pocket to help some people out for the sake of client retention. Where you’ll find the difference is in how people do the math.

— Jesse Powell (@jespow) February 26, 2021

The head of Kraken added that the company would do everything possible to help users, but “will not bend” if it deems the demands unreasonable.

Earlier ForkLog reported that the South Korean exchange Bithumb will pay compensation to clients who lost bitcoins due to a bug in the withdrawal process in 2018.

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