At the same time, the incoming flow of new users to all exchanges is extremely high due to mainstream media coverage of cryptocurrencies. Coinbase app hit #1 on Apple store this week and we can only imagine the amount of traffic to other exchanges. Bitfinex, being the #1 cryptocurrency exchange by volume, could be just suffering downtime from heavy user load and calling it a DDOS.
It’s hard to say what exactly happened because the transparency of Bitfinex is so low. See Tether controversy posts (1, 2, 3), Tether hack, Bitfinex hack, – considering all that the public is extremely skeptical to everything that comes from Bitfinex.
But this time people are losing a lot of money due to Bitfinex’ downtime. Not only the December 13th DDOS/Downtime during the Litecoin rise, but also as the exchange glitched on November 29th when several altcoins ($NEO $OMG $ETP) flash-crashed and the platform was rendered unresponsive. Here’s a collection of seriously disturbing customer complaints:
We are currently under heavy DDOS. API is also down. We are working on further mitigation.
— Bitfinex (@bitfinex) December 12, 2017
great question….i have a feeling this is what happened on Nov 29 when the $NEO flash crash happened…NEO kept trading, but I was unable to enter NEO sells for my margin position…end result about a 120k USD Loss….AND still no response on it from @bitfinex
— Rob G. (@SuperRG1) December 12, 2017
@nathanielpopper Hi Nathaniel, you already probably know but there was a big flash crash for 3 cryptocurrencies in @Bitfinex, on Nov 29. $NEO dropped a 95% , $ETP even more, $OMG also. I'd give you some details if you're interested https://t.co/i3WMszk1zA
— BitNoob (@NoobBit) December 4, 2017
Sam Aiken has put together a post on the $NEO flash crash end November: https://medium.com/crypto-punks/how-we-lost-90-of-crypto-investments-in-a-few-hours-64fdf1fd5ea1
My stop loss was set at $3 …. and my listed liquidation price was $2.54 …. so yea anyone else can rationalize out $1.01 liquidation as user error? Monday quarterbacks everywhere on twitter – waste of time.
— Brian (@biop3rl) November 29, 2017
there are a lot of us… about 4k before. -1.5k after… pic.twitter.com/sWfmjnrOLX
— Maksim (@Maksim61095204) November 29, 2017
The price of ETP suddenly fell down for just 1 minute from $3.5 to $0.05 triggering all kind of stop-losses and liquidations to be executed way below the price that they were set at. A bit later ETP will fall down again from $2.7 to $1.00 and jump right back. So my position was auto-liquidated at an enormously low price and my overall balance became much smaller. And as I understand from other examples, my balance became smaller by moreamount of USD than I’ve actually backed up with collateral to buy ETP, which will later trigger a liquidation chain-reaction. Source
Can someone INDULGE ME? How does ETP + NEO "flash crash" with that little 24 hour volume down to $0.05 and $4.00 respectively? How is that seriously possible??? The order book yesterday showed MUCH MORE orders than that. I check order book walls EVERY DAY.
— Philakone (@PhilakoneCrypto) November 29, 2017
DDOS plus whales putting up huge sells. It was a planned, liquidation attack. This wasn’t a random error or server issues.
— Zachary Kaufman (@ZacharyKaufma11) November 29, 2017
Found something funny. In https://t.co/RK9P7ALhdX , if you get the Bitfinex NEO graph you can't see the candles between 20:36 and 21:51 GMT+1.
So all was working great when the flash crash occurred.
— BitNoob (@NoobBit) November 30, 2017
So once again, to recap – this is what happened. Several cryptocurrencies ($NEO, $ETP) traded on Bitfinex went significantly down for just one minute. According to third-party tools (tradingview) nothing like that ever happened. At the same time, within the Bitfinex platform, stop-loss orders were fired at prices A LOT lower they were set to. People lost tons of money.
Here’s a bunch of safety tips you could take out of it:
- Do not trade altcoins with low liquidity.
- Store your coins in wallets you own and not on exchanges.
- Do not trade on margin on crypto exchanges
- Remember your stop loss orders do not mean anything and everything can be called a “hack” or a “ddos” post-factum.