Kraken CEO defends crypto exchange after ETH price plunge on its platform

"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.