OKEx settled futures contracts early and without warning, causing $24 million in trader losses

OKEx, a Hong Kong-based exchange that is currently the second largest in the world by volume, settled bitcoin cash contracts early without warning on November 14. This unorthodox move caused aggregate losses for short-positions of roughly $24 million. According to Bloomberg, one trader lost $700,000 because his hedging position was closed prematurely.

The move by OKEx has caused some traders scale back or end their relationships with the exchange, while at least one filed a complaint with Hong Kong’s Securities and Futures Commission. Andy Cheung, head of operations at OKEx, told Bloomberg: "After considering various scenarios, we decided that an early settlement was the most fair and rational decision to maintain an orderly market."

In this largely unregulated market, it is unlikely that OKEx will face legal consequences, according to experts cited. However, the loss of customer trust may prove to be a much more costly one. (Source: Bloomberg, AMBER AI)