Coinbase Will Pay Back Ethereum Flash Crash Losses

Coinbase Will Pay Back Ethereum Flash Crash Losses

In late June when a trader sold a large position in Ethereum, Bitcoin’s rival digital currency, the result was devastating for some investors causing what is now called Ethereum Flash Crash. The sale affected those on the Coinbase-owned exchange GDAX – triggering a ‘flash crash’– that caused the price of Ethereum to fall temporarily from $320 to just 10 cents. The price of the currency quickly recovered but not before certain investors lost money. Investors with automated “sell” orders and others who were subject to margin calls after having purchased Ethereum using margin (borrowed money) suffered significant losses.

While Coinbase initially declined to take action, the company has since reversed its position. In a blog post written by the company’s VP, Adam White, the company announced it would establish a credit system to fund accounts with company money. For traders who placed “buy” orders during the crash, it would not unwind the trades.

Investors who purchased Ethereum during flash crash were fortunate to buy at a great discount. The digital currency has gone back to trading at prices around $300 as of this week.

“We will establish a process to credit customer accounts which experienced a margin call or stop loss order executed on the GDAX ETH-USD order book as a direct result of the rapid price movement at 12.30pm PT on June 21, 2017. This process will allow affected customers to restore the value of their ETH-USD account to the equivalent value of their ETH-USD account at the moment prior to the rapid price movement.” 

The Results of the Ethereum Flash Crash  

Coinbase’s decision to pay back investor losses seems to be an act of goodwill. While some have criticized the move to pay back investor losses as equivalent to a bailout, others have applauded the decision. We’ll continue to report on new developments in digital currency.

Did You Lose Money in the Ethereum Flash Crash?

If you are looking for an attorney to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerages firms for their wrongful actions.

Contact a Fraud Attorney Today

With offices in Los AngelesNew YorkWest Palm Beach and Miami, our class action attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and options.

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