GDAX, the digital currency exchange operated by Coinbase that saw the price of cryptocurrency Ethereum drop in a flash crash last week, is reimbursing customers.
According to a news report in TechCrunch, GDAX said over the weekend it would reimburse customers who lost money when the cryptocurrency dropped from $320 to a low of $0.10. The price recovered quickly, but the speedy decline in the value of the digital currency forced traders to experience margin calls or stop-loss orders that resulted in steep losses.
“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,” GDAX said, according to TechCrunch.
The exchange noted that it wouldn’t reverse any of the trades, so for those who bought the Ethereum cryptocurrency when it plummeted in the flash crash and made a profit when it rose will get to keep their profits.
TechCrunch noted the move on the part of Coinbase’s GDAX is a sign of goodwill rather than an admission that it did something wrong. When the crash happened last week, lots of people initially thought it was due to something nefarious, but GDAX eventually said there was no wrongdoing or no instances of an account takeover. The crash was the result of a person placing a multimillion dollar sell order at the market price. Filling the order resulted in the price of the digital currency dropping 30 percent to $224. That created 800 stop-loss orders and margin liquidations that sent it down even more to the low of $0.10 a share.
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