How OKEx Exchange Is Handling”Market Manipulation” Case

OKEx denies any wrongdoing during the BCH disk that is difficult.
Last week, OKEx trade faced negative promotion and accusations of marketing manipulation following adjusting Bitcoin Cash (BCH) futures during the infamous difficult fork.On November 20, the trade reacted to those allegations, basically defending its conclusion and promising to provide proof if the case goes to court. Curiously, it is at least the third time that year that OKEx has shown strange price volatility on their exchange.Brief debut to OKEx, important crypto futures trading playerOKEx was founded in 2017 as an global arm of this no longer operating Chinese trade OKCoin. According to data from CoinMarketCap, it is now the biggest player by volume, managing more than $1 billion value of crypto transactions each day. OKEx is located in Belize and has an operating hub in Hong Kong. Moreover, in April 2018, the business expanded its existence to Malta, mentioning their “confidence” at the neighborhood authorities ’s approach to cryptocurrencies.The exchange has been focusing on futures , which is basically an agreement to purchase or sell an advantage on a particular future date at a particular cost, thereby representing a risk management instrument to investors.On Nov. 3, 2017, OKEx launched its Bitcoin Cash (BCH) and Ethereum (ETH) futures , whereas its parent firm OKCoin had been trading Bitcoin (BTC) futures since 2014. Back in December 2017, crypto futures received broader recognition after mainstream exchanges Chicago Board Options Exchange (CBOE) and Chicago Mercantile Exchange (CME) introduced BTC futures trading to the broader market.Allegations: marketplace manipulation, silent policy upgrades and “sponsored” societal media postsOn Nov. 14, amidst the Bitcoin Cash challenging disk that resulted in two different blockchains, BCH ABC and BCH SV, being born, OKEx abruptly forced the early payoff of its Bitcoin Cash contracts “to prevent potential losses to [their] customers caused by the short-term volatility and possible market manipulation efforts. ” Thusthe BCH future trades were settled against the last traded price at early Nov 14, soon after the announcement.The movement was criticized by numerous investors, who claimed that they had suffered major losses as a consequence of both OKEx’ conclusion. Namely, Amber AI, a Hong Kong-based crypto firm co-founded by former Morgan Stanley dealer Tiantian Kullander, according to LinkedIn, printed a Moderate informative article on the matter, arguing that OKex had altered the rules of the settlement index by discontinuing to reference Bitfinex prices prior to the settlement. The update details were released on November 12, only two days prior to case:“By changing the settlement date and delivery principle against the available interest in the market, [OKex] invalidated their statement. This meant that on the amount, OKEx implicitly enforced a reduction for each short position carried in the contract, providing fair value is 20% higher vsed by the contract. ”Additionally, Amber AI accused OKex of blatantly malfunctioning the purchase submission system on Nov. 15, throughout BCH “many volatile trading session at 9 months. ” As stated by the crypto firm, traders were unable to publish their orders because of a “Limit Order Bug,” although OKEx continued to function at large:“Recorded level-2 data during this period shows the order fitting engine as functioning. The market continued to host traffic and function but with sell-orders above the best offer, and all purchase submissions blocked, except buy-orders below the best bid. ”Amber AI by asserting OKex & ldquo; sponsored & rdquo; a business known & lsquo; Honeycomb Finance & rsquo; to publish a Reddit post supporting the trade & rsquo; s point of view, continued with more allegations. Eventually, Amber AI claimed that OKEx finally enforced a BSV liability because of the BCH debtors despite supposedly writing that “consumers that have excellent borrow of BCH, […] may not need to refund BSV” prior to quietly updating its announcement.Ultimately, traders lost “$24 million” because of the incident, the article argues, ongoing:“The course of events surrounding the BCH hard disk are all indicative of market exploitation, fraud and deceit. ”There were others that have voiced their discontent to how OKex handled the BCH disk that is challenging. Thus, Qiao Changhe, the creator of Beijing-based Consensus Technologies, told Bloomberg that his fund lost $700,000 since its hedging standing on OKEx “has been abruptly closed in a level that didn’t reflect prevailing market prices”:“OKEx is shedding its authenticity […] The futures contract turned into something crap, not anything we might use to hedge. ”Changhe added that he went to lower $5 million fund’s usage of OKEx because of that incident. Bloomberg cites four other alleged dealers who chose to stay anonymous, but also verified that they were going to limit or end their connections. One of them allegedly filed a complaint with Hong Kong’s Securities and Futures Commission (SFC), although the bureau ’s spokesman declined to comment after being approached by Bloomberg.OKEx responseOKEx has issued numerous remarks regarding the event. First, the exchange explained its reasoning in a blog article printed soon after the tricky disk, on Nov. 15. In it, OKEx explained that they introduced the delivery period earlier because unclarity and of strong volatility of “the outcome. ”& & ldquo;A historical statement may make room for market exploitation and lead to reduction to our customers,” the trade added when describing the urgency of the move.Further, on Nov. 19, Andy Cheungand head of operations in OKEx, echoed that reaction in a comment for Bloomberg:“After considering a variety of situations, we decided that an early payoff was the very fair and logical decision to keep an orderly marketplace. First, the trade claimed that they “don’t have an institutional customer profile called Amber AI, whereas Amber AI assert themselves like a Hong Kong-based firm,” including that OKEx “[does not] serve any client in Hong Kong, in respect of the regional regulations and laws ”. “The OKEx account that Amber AI asserted handling is the trade revealed. “Amber AI created a profit on OKEx they promised to have handled throughout the delivery. ”More importantly, OKEx denied some manipulation, noting that Amber AI’s announcements “have caused severe harms to OKEx’ reputation” and that “bulk of [OKex’] users affirms our decision of early delivery of BCH futures contracts. ” The trade also stated that it is about to address the allegations in court“the proof required to the court to prove that OKEx isn’t involved in the trading if deemed necessary will be disclosed by us. We reaffirm that we’ll NEVER [sic] trade against our customers and manipulate the marketplace. &rdquo incidents featuring OKEx and cost anomalies that occurred this year: dealer threatening suicide, whale are two other events involving OKEx that occurred in 2018. There was an unnatural pricing fall on March 30 if the trade posted quarterly futures market that were significantly reduced BTC/USD readings comparing into the remainder of the marketplace. ”“OKEx has the right to warn from most of unethical behavior like malicious manipulation of costs, malicious influence on trading platforms, restrictions on trading, shutting down of account, etc.,” the organization ’s statement shared with customers read. OKEx also verified that a rollback had been finished, which regular trading operations could resume shortly.Furthermore, in August, OKEx included in another situation involving strange marketplace fluctuation after forced liquidation of a sizable misfired Bitcoin futures trade worth $416 million has been initiated by an unknown trader.Due into the “sheer size of the purchase ” — a hefty 4,168,515 contracts, as stated by the market — OKEx stated it required preemptive action, describing that their risk team asked the customer to “partly shut the rankings to reduce the total marketplace risks” several times. &ldquo the customer refused to collaborate, which lead to our decision of freezing the customer ’s account to prevent positions increasing  Shortly after this. . .unfortunately, the BTC price tumbled, causing the liquidation of their account. ”The market then supposedly injected 2,500 BTC (roughly $18.5 million in the time) into an insurance plan to help mitigate the losses incurred from the force-liquidated trade.Crucially, it had been revealed that aside from this insurance policy cover, the system didn’t provide the capital that dealers use to leverage their futures contracts. Rather, it depended on the so-called “rdquo & socialized claw-back; coverage for such instances, meaning that the losses against the unfilled order would need to be covered by counterpart dealers. In that specific instance, some dealers were put to lose 18 percent of their profits.OKEx’ official statement outlined steps the exchange was project to “prevent similar cases” from happening again and to boost risk management and impair potential manipulation.In a comment for Cointelegraph in the moment, OKEx head of operations, Andy Cheung, claimed that this had been a “precious lesson” for him personally and OKEx. […]

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