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Crypto Traders Speculate Hacker Triggered Massive Bitcoin Flash Crash on Kraken

June 04, 2019

Speculation is heating up among crypto traders that Kraken’s Bitcoin flash crash last week was the work of a hacker’s clever manipulation. 

For about five minutes on Friday, the price of Bitcoin plummeted from $11,250 CAD to a low of $101.20, a drop of more than 99%, allowing traders to pick up BTC on the cheap – at prices not seen since July of 2013.

Crypto traders on Reddit say Kraken’s order book shows that someone or a rogue trading bot sold 1,155 BTC (roughly $10 million USD) for $101 CAD each. Some on Reddit initially speculated that the order was a mistake. Others, however, now speculate that the book tells a different story.

1. Hacker get access to compromised account w/ 1200BTC but can't withdraw

2. Hacker puts his own limit $100 buy orders on illiquid pair BTC/CAD

3. Back to compromised account he dumps the 1200BTC on BTC/CAD to himself

4. Hacker is fully legit owner of 1200BTC@krakenfx shame https://t.co/yRzPjgtg1P

— Beetcoin ?? (@Beetcoin) June 2, 2019

On Twitter, crypto traders are theorizing that a hacker may have found a way to access a whale’s Kraken account containing 1,200-1,500 BTC. From a different account, the hacker could then place Bitcoin bids priced at $101 CAD and sell off the hacked haul until the orders reached that level, leaving them open to purchase 1,155 BTC at a 99% discount.

The maneuver would be easier to pull off on the BTC-CAD trading pair, which had thin order books compared to currencies like the US dollar.

So far, Kraken has not released a statement to acknowledge or explain what happened.

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