(Bloomberg) - Crypto exchange BitMEX said it is investigating unusual trading activity, including possible misconduct, that led to a flash crash in Bitcoin on its platform yesterday.
The price of Bitcoin against Tether’s USDT stablecoin fell to as low as $8,900 on BitMEX late Monday, while the largest cryptocurrency was trading above $66,000 on rival venues. The price of Bitcoin on the exchange quickly recovered and has been trading in-line with the rest of the market since.
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A spokesperson for BitMEX said the company investigated the incident and found evidence of “aggressive selling behavior involving a very small number of accounts that exceeded expected market ranges,” adding that its systems had operated normally and all user funds are safe.
BitMEX is “investigating potential misconduct by traders on our Bitcoin-USDT Spot market,” the exchange said in a post on the X social-media platform on Tuesday. The exchange does not employ internal market makers and the orders to sell Bitcoin “were simply too big and frequent for independent market makers and other traders to react to,” according to the same post. The incident had no impact on BitMEX’s derivatives markets and no liquidations were triggered by it, the post added. “Deposits and withdrawals are being processed as usual, often within minutes.”
An X account named @syq, which first posted about the sudden selloff, suggested the flash crash coincided with the sale of 977 Bitcoin worth roughly $66 million. BitMEX’s spokesperson declined to comment further on the details of the incident.
Bitcoin has fallen around 14% from record highs set earlier this month, after a period of rampant demand driven by a crop of spot ETFs launched in the US on Jan. 11. The token is still up almost 50% in 2024.
Bitcoin shed as much as 7.3% to $62,458 on Tuesday after the $25 billion Grayscale Bitcoin Trust, or GBTC, posted a $643 million outflow, its highest since it converted into an ETF on Jan. 11.
By Sidhartha Shukla
