OKEx staged a massacre: "Leeks" lost 35 million in 23 minutes

Half of the 35 million was lost in a few minutes. He wanted to stop loss or cover the position, but the trading software did not work. Li Xiao could only watch his wealth being put into other people's pockets bit by bit. He was puzzled, anxious and angry. Some people said that "using leverage to trade cryptocurrencies is no different from gambling", but he felt that he had experienced a robbery.

On the afternoon of September 5, the price of Bitcoin plummeted continuously, and a large number of users who used leverage (20 times) to trade on the OKEx trading platform were brutally slaughtered. The seemingly normal market fluctuations were considered to be the platform's deliberate harvesting of retail investors due to some signs.

Those who were liquidated had no way to stop losses. APP crashes, platforms were unable to log in, and a series of other situations caused investors to lose years of savings. The largest loss was 20,000 Ethereum in just 23 minutes, equivalent to nearly 35 million yuan.

There is no way to seek help. The customer service promised to give an explanation within one day but broke the promise. OKEx officials said that the matter has not been studied clearly and there is no solution to the user's losses. Investors asked the customer service where OKEx's headquarters is, but the customer service refused to tell them.

There is no legal support. " The platforms are all overseas, and the leveraged transactions between virtual currencies do not actually involve RMB settlement, so it is difficult to define this as illegal futures. " Zhang Menglong, a senior digital currency researcher, told Blockchain Truth (ID: chaintruth).

Many people treat cryptocurrency trading as gambling. They bet their savings over many years in the hope of becoming rich overnight. Now, their savings have been lost, their dreams of becoming rich overnight have been shattered, and they are at a loss as they have been defeated by both the law and the market trend.

Loss of 35 million in 23 minutes

On September 5, Wang Lei received a special "wedding gift".

It was an ordinary day. The wedding was just a few days away, and Wang Lei was nervous and happy. As usual, at 5:30 pm, he got home after buying groceries. Instead of cooking immediately, he turned on his computer and took a look at the price of digital currency on the OKEx official website.

This vigilance stems from more than a year of experience in cryptocurrency trading. "ETH and EOS have been rising for two weeks, and I am a little worried about a decline. I am a contract trader, so I have to stay alert," Wang Lei told Blockchain Truth (ID: chaintruth).

The moment he saw the market, the joy of the newlyweds was instantly dispersed. "The price of Bitcoin fell by 3 points, and I lost more than half of my money." Wang Lei admitted that this was beyond his maximum tolerance. Hurry up and close the position! He made a quick decision.

But the phone didn't listen. "There was no response when I opened the software. There was no response when I entered my account number and clicked to log in. I couldn't see my position at all." Seeing that more than 50,000 yuan had become air, Wang Lei's nervousness suddenly increased.

The price of the currency was still falling, but the phone and computer did not move. Less than 10 minutes later, Wang Lei received a text message, "Telling me that the loss has reached 70%, and I must close the position or cover the position." In less than 10 minutes, he lost another 20,000 yuan.

Wang Lei panicked. He immediately used his wife's mobile phone to log in repeatedly, but to no avail. He had to suppress his inner tension, "My wife doesn't even know that I invested so much money in cryptocurrency trading." Ten minutes later, the account was liquidated. In just half an hour, Wang Lei lost 80,000 yuan. This wedding gift was obviously not so satisfactory.

The page where the APP provided by the rights defender cannot be logged in normally

Almost at the same time, in another city, someone had a very similar experience to Wang Lei. "In just 23 minutes, I lost 20,000 Ethereum (at 18:00 on September 5, the price of ETH was about $252, and 20,000 ETH was equivalent to nearly 35 million yuan)," Li Xiao told Blockchain Truth (ID: chaintruth), unable to hide his anger and helplessness.

Position cannot be viewed

Wang Lei and Li Xiao were not the only ones affected by the “waterfall”. They wanted to take various measures to stop the loss, but OKEx happened to have various bugs at this time, such as APP crash, inability to log in to the platform, inability to view contracts and positions, etc. In this case, even if Wang Lei and others wanted to stop the loss in time, they were helpless.

The retail investors who were "violently looted" quickly organized a rights protection group. In the real world, these people may not have any intersection, but they have to unite for such a compelling reason. Their losses ranged from 10,000 to 20,000 to millions or even tens of millions, and they wanted to fight.

OKEx customer service is “not online”

Unable to log in to the platform, Wang Lei immediately thought of contacting customer service. It was not until after 8 o'clock in the evening that he "got what he wanted". Wang Lei was quite upset by the inconsistent statements of the customer service. He recalled that at first, the customer service said that the machine became slow because of the influx of a large number of customers. Later, the customer service admitted that it was down.

Wang Lei was not convinced by this explanation. "This has never happened on foreign platforms. Once the entire domestic network was disconnected, the price of the currency immediately fell. The strange thing here is that since it was down, the worst that could happen is that all digital currency transactions would stop, but short sellers can trade like crazy, and the trading volume is still expanding. Retail investors can't get in, and you told me that you had too many users and it caused the downtime. This is a lie."

He felt that he should not bear the loss by himself. "If the system is normal and my account is liquidated, I can bear the loss by myself." However, the customer service did not give Wang Lei a reasonable solution. In desperation, Wang Lei asked the customer service more than a dozen times where OKEx's headquarters was, but the customer service refused to tell him. "They said it was not within our scope to tell you." After the two sides were deadlocked, the customer service finally promised to reply with the result on September 6, but as of the early morning of September 7, Wang Lei still did not get the so-called result.

Two hours after the liquidation, some rights defenders received a reply from OKEx customer service, who said the system had returned to normal and that they would provide users with a solution after verification. However, no solution has been given yet.

OKEx official response at 19:40 on September 5

In response to several questions from users, Blockchain Truth (ID: chaintruth) sought an explanation from OKEx. An OKEx executive said that the cause of the accident was very clear. It was due to the huge market fluctuations that caused some users to be unable to log in for a short period of time. As for the more detailed technical reasons, it needs to be carefully studied. This is no different from the content issued in the announcement.

Regarding the user losses caused by the outage, he said: We have the same attitude as we have always taken. " The Internet world is complex, and there are many factors that cause network instability. For user losses caused by the platform's own mistakes, we have always discussed compensation plans and proportions with users in an attitude of mutual understanding and mutual support. At present, the matter has not been studied clearly, and there is no solution to deal with user losses."

But users can’t wait any longer. They want to get back their losses through rights protection. Last time, when “DDT was sprayed on Xu Mingxing”, it was said that 300 rights defenders got back their losses, “those who didn’t go probably didn’t get any compensation.” This time, the rights defenders want to protect their interests in the same way.

In the rights protection group, investors were indignant. "This kind of person is short-lived," "He has no conscience at all," "No need to kill him," "One hand or one foot will do," "Directly operate on the dark web"... They were venting their anger in every possible way.

In the rights protection group, investors were emotional and used harsh words.

Leveraged trading: Gambling on the market

The huge financial losses made many people restless. "I am alone in the office and don't want to go home", "I haven't slept since last night and have been lying in bed for more than a day", "Where can I get money for dinner" and other similar voices never stopped, and the "culprit" that caused their losses was leveraged trading.

Leveraged trading is not a new thing. "Leverage is now most widely used in foreign exchange and precious metals. Generally speaking, the daily changes in the market in this field are a few thousandths. In order to increase their returns, investors will use leverage to trade." Zhang Bohan, CEO of Sanliangzhi, told Blockchain Truth (ID:chaintruth). "A-shares themselves have limits on their price fluctuations. In a bull market, investors will use off-market financing to increase their returns."

In the cryptocurrency world, the situation is different. 24/7 trading, with no limits on the price fluctuations, is like a roller coaster. "In the cryptocurrency world, because the fluctuations are so large, it is generally a terrible thing to double or triple the price," said Zhang Bohan, CEO of Sanliangzhi.

Blockchain Truth (ID:chaintruth) checked the OKEx platform and found that its leveraged trading multiples can be up to 20 times. Under the influence of high leverage, the income is infinitely magnified. For example, if a retail investor invests 100,000 yuan with 10 times leverage and the market rises by 5%, then the retail investor will earn 50,000 yuan. And vice versa.

OKEx official website shows the contract rules that investors need to know before starting leveraged trading

Therefore, for investors, if they want to make money, they must gamble with the market trend. In the cryptocurrency circle, the market trend does not seem to be completely market-oriented. Zhang Bohan said that because of the existence of exchanges and dealers, there are ways to blow up positions. In his opinion, whether the position can be blown up depends on whether the exchange uses the market conditions of a third party or its own market conditions. "If it uses the market conditions of its own market, the exchange can manipulate it by itself, and any large order can increase its own market conditions by a few points."

Once market manipulation becomes possible, exchanges will seize the wealth of retail investors. "Many times, some exchanges will exaggerate their market movements, which will cause some positions to explode," said Zhang Bohan. The result is obvious: "By exploding others, you can take the profits of others for yourself at a very small cost."

The exchanges are rich, but in the eyes of industry insiders, they are eating up the money. "Originally, slippage (the difference between the order placement point and the final transaction point) could have made a lot of money, but now some people are deliberately blowing up their positions, which is overdrawing their reputation. In the long run, it is a lose-lose process."

Investors have almost no advantage in playing against the market. From a legal perspective, investors have little chance of defending their rights. Generally speaking, before providing leverage services, exchanges will specify in the contract how much the price of the currency will fluctuate before forced liquidation. "If the leverage is about 10 times, the entire market falls by about 5% (investors lose half of their profits), and then if it falls by about 8% (investors lose 80% of their profits), forced liquidation will occur. This is the so-called explosion." Zhang Bohan said.

In fact, when the contract profit and loss ratio reached -70%, Wang Lei did receive a risk warning text message from the OKEx platform. But when Wang Lei wanted to reduce his holdings and close his positions, he was unable to log in to the OKEx official website and App.

"If it happens in China, it is similar to illegal futures. But currently all kinds of platforms are overseas. In addition, the leveraged transactions between virtual currencies do not actually involve the settlement of RMB, which makes it difficult to define." Zhang Menglong, a senior digital currency researcher, told Blockchain Truth (ID: chaintruth).

In the game between the law and the market, investors both lost.

The coin circle with only 7 seconds of memory

Perhaps, they have been impatient since they chose leveraged trading. "Generally speaking, normal people don't use leveraged trading," Zhang Bohan said.

"The risk is huge and has gone beyond the scope of investment. The essence of leveraged trading is to seek risk-return. If it is not controlled well, it is actually a form of gambling." Xiao Lei, chief analyst of BiCe, told Blockchain Truth (ID: chaintruth).

The result of gambling is heavy losses . Some people lost 10 million yuan overnight, some lost 10,000 ETH, and some people even lost 9.2 million yuan and wanted to jump off the building that night, but they stopped after being stopped by their friends. But when I called his phone again today, it was turned off and he was nowhere to be found.

Overnight, the "leeks" who were harvested were united by a powerful force. People wanted to recover their losses, but their opinions were divided. Some wanted to sue, while others advocated not to sue. The originally powerful force was weakened in an instant.

“I understand why it is so difficult to defend rights, because no one wants this casino to disappear. I dare say that most people in the group want to recover their losses rather than want OK to go bankrupt,” said an investor.

Perhaps, the fate of this group is the same as that of all rights protection groups. Two days before the incident, retail investors tried every means to recover their losses. But when all the struggles were fruitless, the rights protection group became a dead group in just one week. "Within three days, basically no one in our group will talk, OK, it's over," said an investor.

People in the cryptocurrency world seem to be used to this kind of life. After being plundered like crazy, as long as there is food and grass, there is still hope. "The cryptocurrency world only has a 7-second memory", and the experience of being plundered in the past seems to have become someone else's story. They are full of fighting spirit and once again rush into the battlefield without swords and shadows. But in this game with a huge disparity in strength, they may only have the fate of being plundered.

What Wang Lei faced was that he had to pretend to be happy and prepare for his wedding as scheduled.

Note: At the request of the interviewees, Wang Lei, Li Xiao and Zhang Menglong are all pseudonyms in this article.

Source: Blockchain Truth