Crypto exchange platform BitMEX has said it will refund users who lost money following an unexpected surge in Bitcoin Core (BTC) prices, resulting in a process known as “auto deleveraging.”
BTC defied analyst expectations this week when it skyrocketed in price, shooting up more than $1,000 in a day before finally reaching its peak of $5,330. While still way below the previous highs of 2017, the rapid reversal of momentum in the market triggered automatic filters at BitMEX, resulting in a number of trading positions being closed by the platform.
Describing the issues as “technical problems,” BitMEX confirmed that users who lost money as a result of the automatic deleveraging would be paid compensation. The issue is thought to have affected traders relying on BitMEX leveraged trading products, described by BitMEX as a “minimal” number of transactions.
More concerning for BitMEX customers is the fact their insurance policy failed to compensate those that had lost out, just a matter of weeks after the firm was triumphant in celebrating securing a comprehensive insurance fund for unexpected customer losses.
While the upsurge in pricing caught BitMEX by surprise, executives have confirmed around 200 users will be individually compensated for any losses.
BitMEX confirmed the compensation offer in a blog post outlining the events leading up to these problems.
According to the exchange, “For users that were affected, BitMEX will be reaching out to you personally to explain the situation and document your compensation. We compensated users based on the maximum potential profit that they would have made over the timeframe of these auto-deleveraging events…BitMEX did not profit from these auto-deleveraged positions.”
The news has been met with a lukewarm response from those affected, many of whom would have missed out on potential gains in the value of their trading position.
While the offer of compensation against losses will bring some comfort, others will likely continue to feel aggrieved at having missed the chance to capitalize on this, albeit temporary, reversal in fortunes for BTC.
Ironically, BitMEX has been amongst the most bullish exchanges with respect to BTC, forecasting prices of up to $10,000 in 2019, against the trend of analysis from other sources. Perhaps if they truly believed this was likely, they would have disabled the auto deleveraging function in advance.
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