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Bitcoin Flash-Crashes on Kraken Exchange

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.

(source: TradingView.com)

Coincidence?

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.

krakenFlash2.png

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.

krakenflash3.png

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

(source: TradingView.com)

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.

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Written by Ravi Gupat

Ravi grew up in India and graduated in Economics. He is a serial entrepreneur who has founded and exited several companies in tech and media over the past 15 years. He is also an early stage investor and advisor in various blockchain-based companies.

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