Double Flash Crash: Deribit Reimburses $1.3M, Coinbase Remains Silent

Deribit, the Bitcoin Futures, and Options Exchange had to unhand 150 BTC on 1, Nov 2019. This amount was reimbursed to the users who suffered losses from the BTC index data calculation issue last night.

At 21:00 UTC on 31st October, Deribit exchange users experienced a flash crash after the Coinbase BTC-USD downtime. Effectively, this crash pushed the futures prices from $9,150 to $7,720 in just 2.5 mins. The flash crash lasted a couple of minutes and in this brief interval, multiple orders were catered.

The exchange quickly posted a reassuring tweet. According to it, “Deribit will compensate clients that were negatively impacted by this liquidation error. We are preparing the compensation process to reimburse clients. Final timing to be confirmed.”

But, it blatantly refused to roll back any trades initiated by erroneous indexing. And the traders are not happy, they prefer rollback over reimbursement.

Replying to a user query Deribit confirmed even the profitable trades bids placed during error-pricing will not be rolled back.

Within 8 hours of the unfortunate flash crash, Deribit reimbursed all the affected accounts.

Was it due to a wrong print from Coinbase?

Deribit was not alone on Halloween night. Coinbase Pro also witnessed a flash crash at 19:55 UTC on the same night. However, on Coinbase Pro, the BTC spot price witnessed a drop from $9,260 to $9,055. And it took almost 90 minutes for the exchange to implement the fix.

Coinbase Pro Crash


The exchange users reported their stop-loss orders were deleted before the issue occurred. So effectively no sale occurred.

Although the BTC prices have rebounded to normal on both exchanges, it seems the Coinbase Pro glitch led to the catastrophic low order filing on Deribit. And we have a reason to believe so. The answer lies in “How Deribit works?”

According to the website, the Deribit BTC index is made up of prices from 7 different exchanges. And Coinbase happens to be one of them. Yesterday night exchange’s print happened to be $4250 and is most likely to have caused the flash crash. However, Deribit’s engine is designed to exclude the lowest and the highest prices. It seems yesterday it failed to do so and thus the low order filing.

Coinbase Pro Print


Deribit is attempting to alter the engine so that a fixed BTC level is used for stop-loss trade. In the last 12 hours, Deribit has been acting quite responsible, but we are yet to hear anything from Coinbase Pro yet.

Previously, we compiled an in-depth analysis of 17 new coins that Coinbase is exploring to list next.


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