- Apr 2017
After GDAX experienced a significant Ethereum flash crash two nights in a row, they posted the following update:
And then, something that was very unexpected, they followed that up with another update bringing a solution to the problem:On 21 June 2017 at 12:30pm PT, a multimillion dollar market sell was placed on the GDAX ETH-USD order book. This resulted in orders being filled from $317.81 to $224.48, translating into a book slippage of 29.4%. This slippage started a cascade of approximately 800 stop loss orders and margin funding liquidations, causing ETH to temporarily trade as low as $0.10.
Our initial investigations show no indication of wrongdoing or account takeovers. We understand this event can be frustrating for our customers. Our matching engine operated as intended throughout this event and trading with advanced features like margin always carries inherent risk.
We are continuing to conduct a thorough investigation and will keep customers updated with any resulting actions. With that in mind, it is important to note that these trades are final in accordance with our GDAX Trading Rules. Honoring properly executed orders is critical to maintaining the integrity of an exchange.
In response to the large price movement we decided to temporarily halt trading of ETH-USD. Once we confirmed all systems were operating correctly, we restored trading in accordance with our Downtime Process.
GDAX is just over two years old and has grown to become one of the world’s leading digital asset exchanges. We launched our first version of margin trading earlier this year and have generally seen strong customer demand and positive feedback.
Our long-term ambition, however, is to be a leader among all exchange platforms and we are committed to serving as the most trusted provider to the world’s largest institutions and professional traders. We are confident that all trades this week were executed properly, however, some customers did not receive the quality of service we strive to provide and we want to do better.
We will establish a process to credit customer accounts which experienced a margin call or stop loss order executed on the GDAX ETH-USD order book as a direct result of the rapid price movement at 12.30pm PT on June 21, 2017. This process will allow affected customers to restore the value of their ETH-USD account to the equivalent value of their ETH-USD account at the moment prior to the rapid price movement. To clarify:
We view this as an opportunity to demonstrate our long-term commitment to our customers and belief in the future of this industry. We will follow up directly with affected customers about this process next week.
- For customers who had buy orders filled — we are honoring all executed orders and no trades will be reversed.
- For affected customers who had margin calls or stop loss orders executed — we are crediting you using company funds.