Encryption Exchange OKEx issued an official statement today, August 3, in response to its forced liquidation of a colossal Bitcoin futures deal (BTC) worth $ 416 million that was initiated by an unidentified problematic dealer ## beginning of this week. 19659002] OKEx, currently the second largest stock exchange in the world for commercial value, said its risk management alert system was immediately activated when the long position was initiated by an anonymous futures operator at 2 am (Hong Kong Time) of 31 July.
Because of the "absolute size of the order" – a huge number of 4,168,515 contracts, according to OKEx – the exchange says that preventive action was needed, explaining that the risk team asked the customer to "partially close positions to reduce overall market risks". times,
"However, the customer refused to cooperate, which led to our decision to freeze the client's account to prevent further positions from increasing shortly after this … u unfortunately, the price of BTC has collapsed, resulting in the settlement of the account. "
The exchange added that since then injected 2,500 BTC (about 18.5 million dollars) into an insurance fund to help mitigate the losses suffered by the liquidated trade force.
Basically, apart from this insurance coverage, the platform does not in itself provide the funds that operators use to exploit their futures contracts – the OKEx positions can be exploited in particular up to 20 times according to current rules. Instead, it operates using a so-called "claw-back" policy for cases where a trade deficit occurs.
The "recovery" means that the losses of the outstanding order will have to be covered by the counter traders. In this case, those with unrealized gains on their short positions this week are destined to lose 18% of their profits, as Bloomberg notes.
The official statement of OKEx outlines measures that the exchange is undertaking to "prevent similar cases" from occurring again and to improve risk management and counter possible manipulation – measures that they say are "in line" with the roadmap of the future of the platform released at the beginning of this month.
At the time of printing, OKEx did not respond to Cointelegraph's comment request.
As reported in July, OKEx is currently working with the Malta Stock Exchange to create a new institutional security token trading platform. The exchange was transferred to the crypto-friendly island this April.
Bitcoin (BTC) is currently trading at $ 7,481, down about 1% on the day and 8.5% on the week.