Ethereum’s order book at Coinbase’s GDAX was completely obliterated last night as someone sold millions of dollars worth of eth at market price, leading to a cascade of 800 stop orders and margins, sending ethereum’s price to ten cent.
Coinbase stated their preliminary investigation shows there was no wrongdoing, but they continue to investigate, halting trading until they are sure “all systems were operating correctly.”
To those who lost funds, Coinbase stated “our matching engine operated as intended throughout this event and trading with advanced features like margin always carries inherent risk.”
But there was reward too as someone turned $350 into a million by being able to buy at 10 cent as shown by screenshots of the order book at the time of the events:
This isn’t the first time a large sell order causes mayhem. On May the 8th, someone did the same sort of thing at Kraken, where a large sell order was performed during a DDoS, sending price down to $20.
Kraken said back then that the large sell order coincided with the DDoS, stating there was no relation, but they have not released any independent audit or investigation report of just what exactly happened.
While at GDAX, there was a glitch back in April that sent eth’s price to $0.06, causing mayhem at the ethereum futures exchange Bitmex.
As such, super discounted eth appears to be a monthly event, but as a regulated exchange Coinbase will need to do some thorough investigation, including perhaps detailed questioning of whoever sold millions of dollars worth of eth at market price.
Because whoever has that much money, likely also has sufficient intelligence to know fully well that such market sell order means they will lose plenty of funds due to receiving far less than selling them off the counter or splitting the trade into far smaller sell orders.
Unless, of course, they had bids at 10 cent or $1 dollar. Then the trade would be immensely profitable if the market order seller and his friends do not get caught by Coinbase’s investigation or by investigators from the regulatory authorities.
In any event, since this is now happening monthly, there is likely to be increased pressure on Coinbase to more thoroughly explain what exactly happened, how have they reached their conclusions and how will they ensure this does not happen again.