Business

Erik Gibbs

OKEx exchange denies allegations it manipulated the crypto markets

Customers of the OKEx cryptocurrency exchange woke up recently to find that the exchange had fooled around with options on its platform. OKEx had settled Bitcoin BCH futures contracts with virtually no warning prior to last week’s hard fork of the BCH blockchain, leading to what some are calling “multi-million-dollar” losses. In fact, one investor said that his fund dropped $700,000 almost instantaneously because OKEx closed the contracts at a level different than what was reflected in market prices. The decision has caused a hurricane of bad press for the exchange, with many calling for an investigation. As is to be expected, the exchange has publicly come forward to that it did nothing wrong.

A Medium user, “AMBER AI,” addressed the issue in a recent post, accusing OKEx of “outright market manipulation and one of the more serious acts of fraud in the history of limit order book trading in the cryptocurrency markets.”

The poster added that traders have lost as much as $24 million over the decision. The post continues, “The course of events surrounding the BCH hard fork are indicative of market manipulation, fraud and deceit.”

After OKEX made the move, it weakly tried to explain its decision as a means to protect user assets. It said, “It has come to our concern that an early announcement may make room for market manipulation and cause loss to our users. Therefore, we decided to give a short notice in order to maintain the fairness and stability of the market.”

In response to the accusations levied against it by AMBER AI, it said, “In the absence of evidence, Amber AI alleged us for trading against our own customers and manipulating the markets. These are completely false allegations and the defamatory statements have caused serious damages to OKEx’s reputation.”

Its reputation was already damaged, due to its own decisions. This past August, the exchange froze a user’s account and began a forced liquidation because the user took a long position of 4,168,515 Bitcoin futures contracts. OKEx then contacted the user and asked him to lower the position, a request that was refused. The exchange had no business getting involved with the user’s actions.

OKEx has apparently had its feelings hurt by the AMBER AI Medium post. It said that it is considering legal action against the user. Given that the Hong Kong Securities and Futures Commission could be poised to investigate OKEx over its handling of the contracts, a post on Medium seems to be the least of its problems.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

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