On the 14th of November, just one day before the now infamous Bitcoin cash fork Hong Kong-based crypto exchange, OKEx made the decision to close all Bitcoin Cash future contracts early, due to what the exchanged termed an “extremely volatile” market.
However, the decision was not without its consequences, in this case, a loss of over $700,000 according to one trader, along with a myriad of other losses for others.
SPECIAL ANNOUNCEMENT: All Bitcoin Cash (BCH) futures contracts will stop trading at 9:05am and be delivered at 10:00am Nov 14, 2018 CET (UTC +1) due to the upcoming hard fork. We will provide a detailed explanation shortly.#OKExAnnouncementhttps://t.co/yh3p46tirc pic.twitter.com/oqioSUOUsf— OKEx (@OKEx) November 14, 2018
Bloomberg reports that the aforementioned trader, known as Qiao Changhe, cited losses to his fund amounting to $700K due to the early closure of the $135 million derivative contracts.
Changhe relays that the contracts were closed at a level that didn’t reflect prevailing market prices:
“OKEx is losing its credibility. The futures contract became something nonsense, not something we could use to hedge.”. Said Changhe.
OKEx qualified their decision by citing “volatility” concerns as a chief reason for the early delivery adding that there was no “heads-up” due to concerns about market manipulation:
“It has come to our concern that an early announcement may make room for market manipulation and cause loss to our users.”.
Users on Twitter also voiced their displeasure at the early delivery:
Usually, announcements are made before— Federico 🎅 (@Federico_Xmas) November 14, 2018
There is no rationale. You have compensated longs and punished shirts through your ineptness. You didn’t think the future would be trading at a big discount with a fork coming 🤦🏽♂️— Bingo Wings (@bingowingsuk) November 14, 2018