"Please don't trade on leverage if you don't understand the risks."
That's what Kraken's Jesse Powell said to one user upset in the aftermath of a significant price decline on the crypto exchange's ETH/USD market. On Monday, as crypto markets whipsawed, the price of ETH on Kraken sharply fell to $700 — dislocating from the broader market. As previously reported, Coinbase's low for ETH at that time was just above $1,500.
Powell later took to Twitter and the broader press to explain that the move was caused by extreme selling, not a malfunction of the exchange's trading engine.
"We're in the process of investigating," Powell told Bloomberg News. "There doesn't seem to be any evidence of a trading-engine malfunction. It seems like trades process accurately."
The response to questions about a trade engine glitch followed a Twitter post from Coin Metrics data analyst Kevin Lu, prompting pushback from Powell.
In one exchange on Twitter, Powell was more blunt, asking: "How do you define 'fair'? The system worked as intended. Everyone knew the rules up front. What more can you ask for?"
Indeed, the recent bout of volatility impacted a wide swath of traders, according to the available market data. As bitcoin fell below $48,000 earlier in Tuesday's trading session, nearly $6 billion in crypto futures positions were liquidated.