More

    BitMEX Provides Clarity On The Insurance Fund After Traders liquidated Last Week

    As the cryptocurrency market faced one of its worst days on Mar. 12 dubbed “Black Thursday” following Bitcoin‘s crash to $3,600 USD, BitMEX was put in the spotlight following a crash on its system. In a blogpost published on the website, the largest BTC Futures exchange explained what transpired on Mar. 12 and Mar. 13, to give traders a much needed clarity.

    One of the key points that traders were curious about, is BitMEX’s insurance fund, which grew in value as the rest of the market collapsed.

    BitMEX opens up on its BTC insurance fund

    The statement starts by explaining the liquidation and bankruptcy levels and what processes take place during liquidation. The most important part of the blog is the explanation on what its insurance fund did once the world of crypto came crashing down.

    At the time, the exchange was called out for “shutting down the exchange” for about an hour – BitMEX said it suffered double DDoS attacks – forcing out a number of traders in the process when the exchange came back online. Questions fielded in from most of the traders who wondered why the insurance was never activated during the crash.

    The exchange wrote that the insurance fund is strictly levered to preventing auto deleveraging (ADL), which is explained as:

    “ADL means the automatic deleveraging of the positions of profitable traders (ranked by profit and leverage in that contract) against liquidated positions to prevent bankruptcy.”

    The post further states that the insurance fund is not be used to cover BitMEX running costs or contribute to BitMEX profits, and ‘it is not used to influence markets, intentionally or otherwise.”

    Community rejects BitMEX explanation

    While the explanation given by the exchange soothed a few hearts, a number of traders were left unconvinced. During the whole crash, the insurance fund hit an all-time high as other exchanges faces depletion on their funds. This prompted a number of questions from the community. One trader on Twitter wrote,

    “Given that order book was well below mark price, liquidated long positions were well in the red, so it is strange that the insurance fund didn't lose more.”

    Get Free Email Updates!

    *Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

    I will never give away, trade or sell your email address. You can unsubscribe at any time.

    Lujan Odera
    Lujan Odera
    Lujan is a blockchain technology and cryptocurrency author and editor. He has worked in the field of cryptocurrencies and blockchain technology since 2015 helping him gain enough experience to be the writer he is today. He is known for his simple writing style that allows novices to understand the field in the simplest way.

    [Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

    [Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    3,354FansLike
    2,774FollowersFollow
    4,134FollowersFollow

    Live Bitcoin Price & Latest BTC Charts

    Today's Latest Crypto News

    Crypto Exchange Binance Looks To Join Houbi, OKEx In Launching A Mining Pool

    Top crypto exchange Binance has plans to launch its own mining pool, according to a Russian crypto news outlet Coinlife on Tuesday. The news was...

    Coinbase Custody Moves Tezos (XTZ) Staking Bakery From US to Ireland For Regulatory Reasons

    Coinbase has managed to move the Tezos Staking Bakery, the largest validator since its launch in 2019 which the exchange has been operating since...

    BitMEX’s Operator HDR Global Grants $100k Towards Bitcoin Core Development

    BitMEX’s parent company HDR Global Trading Limited has awarded $100k to the Bitcoin core developer Michael Ford. This will be the second grant towards...

    Bitcoin, Ethereum, DogeCoin, Lightning Network's Code to be Buried Under Arctic Ice

    The Bitcoin codebase snapshot will be encoded onto film and afterwards be stored for 1,000 years under ice, in Svalbard, Norway. The move is included...

    Huobi Wallet to Integrate Crypto Lender Cred Allowing Users To Earn Interest

    The crypto exchange offering wallet services Huobi has closed a partnership with the decentralized crypto lending company Cred in order to offer user's interest...

    BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.