OKB, the native token of OKX, suddenly dropped by 50% from $52 to a minimum of $25, according to data from the OKX exchange. The sharp decline, according to OKX’s explanation, was the result of a wave of massive liquidations, coupled with an overall bearish trend in the market.
OKB token suffered a flash crash, dropping its price by 50% within minutes. Crypto markets have been falling. OKB is not a major token, but it shows how weak liquidity can be in the crypto markets.
OKX’s market cap decreased by more than 10% after this price movement, from approximately $3 billion to $2.7 billion, according to data from CoinMarketCap. At press time, the OKB token has rebounded above $44, and OKX’s market cap has also recovered above $3 billion
The cause was initially unknown. However, after a few hours of the incident, OKX shed light on the leading causes of the early crash, citing massive liquidations and the market’s downward trend. According to OKX, OKB’s price movements were initially consistent with general market trends. However, when the price of OKB reached around $48, it triggered the liquidation of multiple large leverage positions.
A Downdraft Hits Markets
The wave of liquidations, coupled with the ongoing market downturn, sharply drove OKB’s price down. As the price continued to fall, it triggered further liquidations, affecting pledged loans, leverage transactions, and cross-currency transactions. This spiral of liquidations created a feedback loop, with OKB hitting the day’s low of around $25 in a short period.
OKX has pledged to compensate its users for any additional losses incurred due to this incident. The exchange announced that details regarding the compensation process would be released within the next 72 hours.
Furthermore, OKX said that it will take proactive measures to prevent such incidents in the future. These include optimizing spot leverage gradients, enhancing pledged lending risk control rules, and refining liquidation mechanisms.
OKX Faces Scam Allegations
In addition to the price decline of its native token, OKX is also facing a recent accusation of being a “scam exchange.” The decentralized blockchain platform, Ice, took to Twitter yesterday to voice serious allegations against the exchange.
In a tweet, Ice blockchain declared OKX a “scam exchange” following their ICE token listing on January 19. Ice claimed that despite a prior agreement with OKX for the listing, numerous issues plagued the launch day, including users struggling to find the newly listed coin, trading restrictions based on local compliance, and conflicting responses from OKX support.
Ice emphasized that they reported these concerns promptly to OKX, but as of yet, no concrete actions have been taken by the exchange to address or rectify the reported problems.
In response to Ice’s accusations, Haider Rafique, OKX’s Chief Marketing Officer, said that OKX is actively investigating the cases of users unable to locate the listing on their app or website. Rafique cited the complexity of new listings, attributing discrepancies in user experiences to factors such as local laws, regulations, KYC requirements, and listing policies.
OKX ranks as the second-largest crypto exchange after Binance, holding over $14 billion in user assets, according to data from DefiLlama. Despite facing challenges in the market during 2023, OKX demonstrated resilience and strategic prowess by forging impactful partnerships with prominent global entities.
One notable collaboration was revealed in December when OKX announced its alliance with the renowned F1 racing team McLaren. This partnership was established to expedite access to Web3
Last year, OKX announced it extended its partnership with the famous football team Machester City. Manchester City is also OKX’s first global brand partner. The goal of their partnership is not only to enhance brand visibility but also to contribute to the development of Web3 technologies.