Ethereum traders had an intense night following a DDoS attack on Kraken, one of the main ethereum exchanges. The DDoS coincided with a large eth sell order which triggered a cascade of liquidations, said Kraken.
Many reported losses as their position was forcefully closed while they were unable to react due to the DDoS preventing access to the website. Price went down some $40 in three minutes, from $90 to $50 where it initially found some support.
It then went further down by nearly $25, hitting a bottom of $26, with the entire event over in one hours, which is how long it took Kraken to get back up. As soon as the website became once more available, everything returned back to normal.
In the meantime, it is probable that everyone who had a long position has been called at an 80% or so loss of their funds. Leading to criticisms that Kraken should have suspended trading during this period.
Kraken publicly stated today that they had investigated the incident and “did not find any evidence of a coordinated attack or market manipulation.” A statement that might have far more credence if it had been made by independent auditors/investigators in combination with a full report of what exactly happened.
They further say that if they had halted trading “the consequences for traders would have been even worse. Crypto assets trade on many exchanges and shutting down an individual market simply means that participants there cannot react to the changes elsewhere.”
Participants could not react as the DDoS had locked them out. Once they were able to react after the website became available, trading almost instantly returned to normal. Had they been able to react, it is very unlikely price would have reached $26 or would have been able to trade at an incredible discount for one hour.
That’s because the bulls would have converted fiat, other digital currencies, and probably everything they have, to buy at such prices, thus most probably easily filling the order, even if it was large.
The coincidence of the two events, therefore, appears on its face to be very suspicious, with bitcoin also affected by a temporary price drop of $150. For ethereum, which has experienced new highs, the event appears to have led to a slight overall panic, sending its price down 10% today to then somewhat recover.