Bitcoin Flash-Crashes on Kraken Exchange Well Before Tether News

One of the most trafficked and trusted cryptoasset exchanges, Kraken, was yesterday the scene of a flash crash of Bitcoin which saw the crypto drop 20% in the span of less than five minutes, from roughly $5,450 to $4,357 and back.

Although this flash crash seemed anomalous when it happened, the recent news regarding the New York Office of the Attorney General’s (OAG) allegations surrounding Bitfinex and Tether (USDT) throws the event in a new light. The OAG has accused Bitfinex of having a $850 million shortfall on their books - which is far from the first time such allegations have been aimed at the exchange.

kraken flash crash(source:


The story was originally broken by the Wall Street Journal (WSJ) late last night (April 25, EST), while the crash occurred at about noon - several hours before the OAG filed an affirmation with the New York County Clerk against Tether and iFinex - Bitfinex’s parent company.

Thus the crash preceded both widespread reporting of the news, and (narrowly) public knowledge of the event itself.


The confluence of events could be a coincidence, and there has been no direct evidence found thus far to support the notion that someone with pre-public knowledge of the impending news dumped a large amount of bitcoin onto Kraken’s books.

However, another coincidence involving Bitfinex also occured yesterday, before both the Bitfinex/Tether news and the Kraken flash crash: bitcoin stolen from Bitfinex in the summer of 2016 during a hack was sent from known addresses yesterday, for the first time in years. The largest of these transactions, for 167 bitcoin, is viewable here and the originating (hacker’s) address can be verified here.


The only information we can immediately glean from this new receiving address is that it’s a multisignature wallet, beginning with the number “3.”

kraken flash crash(source:

The ongoing market reaction to the news has been fairly grim so far. The initial dump was fought back at $5,000; currently holding at $5,150, a return to the structure about the key $5.35K mark seems wholly unlikely at this time.

Bitfinex Wants to Offer 100x Leverage For Crypto Derivatives Trading

Michael LaVere
  • Bitfinex will offer 100x leverage trading for cryptocurrency derivatives
  • According to the exchange's CTO, the hedging product is "ready for prime time"

Cryptocurrency exchange Bitfinex revealed it wants to offer derivatives products with up to 100x leverage for cryptocurrency traders. 

Hedging On Cryptocurrency Derivatives

Chief Technology Officer Paolo Ardoino told The Block on June 25 that the cryptocurrency exchange was ready to ship a 100x leverage product for certain users. According to the post, the project has been under development for some time and is “now ready for prime time.” 

The product was referenced in last month’s whitepaper published by Bitfinex for its $1 billion private token sale of LEO, stating

“Qualified Bitfinex account holders will be able to trade a new hedging product through a derivatives wallet.”

The whitepaper originally claimed that the new hedging mechanism would be released by the end of June, a timetable that fits with Ardoino’s “ready for prime time” statement. 

Ardoino confirmed that only “verified” customers will be allowed access to the product, given the risks involved in such highly leveraged trades. 

The CTO also took to Twitter to quell user concerns over Bitfinex’s existing 3.3x margin trading. Ardoino explained 100x leverage will be “optional,” and that their current leveraged trading products will be unaffected by the release. 

Big Risk, Big Reward

Bitfinex is looking to compete with rival exchange BitMEX, who already offers 100x leverage through its bitcoin perpetual swap contract. However, Bitfinex claims its product is designed as a legitimate hedging tool for clients, rather than a gambling mechanism. 

Max Boonen, CEO of trading firm B2C2, believes the product will only appeal to retail hedgers, as large investors will shy away from the risks involved in 100x trading. 

According to Boonen, 

“There’s nothing wrong inherently about 100x. But as a commercial hedger you want lower leverage margin. The larger investor wouldn’t want to take the risk of 100X, typically. They don’t want to go balls to the wall.”

The cryptocurrency derivatives market has been heating up. Last week bitcoin-bull Mike Novogratz’s Galaxy Digital announced plans to offer cryptocurrency options contracts.

Binance has also reportedly been exploring futures trading. On June 24, Binance CEO Changpeng Zhao tweeted the exchange had executed its first margin liquidation for a BTC short.