Kraken, one of the oldest and most popular cryptocurrency exchanges in the world, seems to have had an anomaly in its operation; one that won’t go down well with quite a lot of people.
Late last week, the exchange took to Twitter, announcing that it discovered a bug that allowed some users to purchase Bitcoin at $8,000 per token and sell it for a cool $12,000. Expatiating, Kraken said that “a test of an unreleased advanced order type encountered a bug, which resulted in the order’s prices being matched against the wrong side of the book.”
The exchange further explained that as a result of this bug’s actions, it had seen orders being executed on either side of the $4,000-wide spread, although the intervening liquidity wasn’t cleared. Despite these, the exchange confirmed that the anomaly triggered stop orders, which were correctly filled at the market price.
The company subsequently recommended that all affected users should contact it with any questions. Still, the proactive stance taken by the exchange didn’t stop disgruntled users from lodging their critics.
Apart from the fact that such an event could have ramifications for the exchange in the long run (as well as its customers), many pointed out that this could lead to additional scrutiny from regulators, thus adding a further layer of protection and free fodder for those who believe that crypto assets are nothing but scams.
In addition to this, a case of possible price manipulations could potentially call for further scrutiny of the space, while blocking the ability of Bitcoin to fulfill its potential as an investment vehicle.
Bitcoin ETFs, which many believe will significantly transform the way investors interact with Bitcoin for the better, have so far been blocked by the United States Securities and Exchange Commission over concerns for investor safety and stability. If cryptocurrency exchanges are seen to be vulnerable to unforced price manipulations, what’s stopping regulators and naysayers from clamping down on them as well?
Expressing the issues he had with the criticisms, Jesse Powell, the exchange’s founder and chief executive, said via Twitter, “I’m not sure how ‘a legitimate trade for pricing purposes’ is defined. Agree that matching at trade to the wrong side of the book is an exchange error. Everything that happened after that worked as expected. Trade printed, stops triggered, other orders matched just fine.”
It’s easy to see things from both the perspective of the exchange and those of people who are concerned. Kraken wants everyone to know that they found a problem and apart from the fact that it fixed the issue, it seemed as though everyone left unscathed; so, the rumor mills should relax.
On the flip side, the crypto community seems to be tired of the bugs and security breaches, and they believe that if the crypto space is to be taken seriously as an antidote to the stale, rigid financial industry, these loopholes need to be fixed.