Ether’s 50% Selloff Was Genuine, Not an Error, Kraken CEO Says
An employee wearing a protective face mask inspects mining rigs mining cryptocurrencies, in Romania, on Jan. 22, 2021. (Photographer: Akos Stiller/Bloomberg)

Ether’s 50% Selloff Was Genuine, Not an Error, Kraken CEO Says

A plunge of more than 50% in Ether’s price on cryptocurrency exchange Kraken was probably caused by extreme selling, and not by a trading-engine malfunction, the bourse’s CEO said.

Crypto prices tumbled across the board on Monday, with many tokens falling more than 20% during the trading session. Ether, the second-biggest digital coin, sank as low as $700 from about $1,600 on Kraken, according to a report from Coindesk.

“We’re in the process of investigating,” Jesse Powell, chief executive officer of Kraken, said in an interview on Bloomberg Television. “There doesn’t seem to be any evidence of a trading-engine malfunction. It seems like trades processed accurately.”

Ether’s 50% Selloff Was Genuine, Not an Error, Kraken CEO Says

Powell said the losses could have been exacerbated by the availability of margin trading and stop-loss orders on the exchange.

“It could be that a single whale just decided to dump his life savings.”

Ether extended losses on Tuesday, tumbling as much as 19% to about $1,450 as of 10:54 a.m. in London.

The exchange is unlikely to roll back trades, the CEO said. But he left room for some kind of compensation to clients affected by the dramatic moves. “We may end up doing something for these people. We’re looking into it,” he said.

Ether’s 50% Selloff Was Genuine, Not an Error, Kraken CEO Says

At a time when cryptocurrency enthusiasm has swept markets and captivated billionaires and small traders alike, the sharp moves raise questions about the stability of crypto exchanges. The industry is lightly regulated and the U.K. financial watchdog has warned that investors risk losing all their money.

The risks haven’t deterred investors who profited from soaring crypto prices over the past few months. Powell said Kraken is seeing five times the number of new clients as a few months ago.

“It’s still a bit of the Wild West. You still have to do your own research and learn how things work, and you’re kind of trading on professional mode on many of these venues,” he said.

©2021 Bloomberg L.P.

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