Facing heavy liquidation of long bitcoin position, OKEx management has decided to undertake some of the losses and expand the insurance fund.
As the company stated in the report, one of its clients placed a large long position order (4168515 contracts), which met an eye of our risk management team.
"Our risk management team immediately contacted the client, requesting the client several times to partially close the positions to reduce the overall market risks. However, the client refused to cooperate, which lead to our decision of freezing the client’s account to prevent further positions increasing. Shortly after this preemptive action, unfortunately, the BTC price tumbled, causing the liquidation of the account," commented the company.
In this situation, the exchange allocated 2,500 BTC from its own funds to increase the insurance fund (10 BTC earlier). Notably, OKEx will pay strong attention to any manipulation attempts during the Friday settlement, and thus the price can be moved back to the acceptable level manually.
"Such actions will largely reduce the socialized clawback ratio of this week," according to the company statement.
Following this case, the exchange launches measures to boost the risk management. In particular, new rules for preventing marginal trading manipulations will reportedly come into force beginning from August 4. These measures will include restrictions for the size of positions.