
One Ethereum trader just made $1,142,400 in seconds, thanks to an epic glitch - KasianFranks
https://medium.freecodecamp.org/one-ethereum-trader-just-made-1-140-000-in-seconds-thanks-to-an-epic-glitch-48af7e0ffe49
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bedhead
Can we stop using the word "currency" with these things? They are trading
sardines.

[https://www.thestreet.com/story/11064384/1/kass-trade-the-
ra...](https://www.thestreet.com/story/11064384/1/kass-trade-the-range.html)

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teekno
This title is extremely misleading. There was no "epic glitch", just a market
crash that this trader took advantage of.

~~~
sureste
This describes most freeCodeCamp articles. They tend to use click-baity
titles.

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peterkelly
It wasn't a glitch - the system was functioning exactly as designed. Yes, GDAX
should have had a circuit breaker implemented (and I expect they'll do so
shortly), but lots of people were foolishly doing margin trading.

This story happened more than a week ago, and GDAX has since (at great cost)
decided to refund all those who lost money due to margin calls or stop loss
orders: [https://blog.gdax.com/eth-usd-trading-
update-2-216a3b946ef6](https://blog.gdax.com/eth-usd-trading-
update-2-216a3b946ef6)

Hopefully this will serve as an important lesson on the risks of margin
trading, and encourage all exchanges to implement circuit breakers.

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celticninja
Why should they stop trading because the price is falling? With multiple
exchanges it doesn't make sense, if there was a huge fall in price across all
exchanges and some stopped and others didn't then what?

~~~
omgtehlion
Because all mature exchanges have price limits. Even when stock is traded on
multiple exchanges.

Sometimes these limits are 1/2x and 2x of average/opening/auction price,
sometimes are very tight. Some exchanges stop trading given security for the
day, others are recalculating these limits in almost real time and stop for a
couple of minutes max.

All these safeguards are there for a reason. And some site positioning
themselves as “exchange” and not reversing/pausing (or at least ivestigating)
tells only about their maturity.

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kasey_junk
This is the same flash crash that was reported last month, not a new one.

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Shank
It doesn't say anything about whether or not the trader sold it back and
converted it to USD/another fiat currency through an exchange. It stands to
reason that if the trader were to launch that sell order, it would probably
tank the market in the very same way that the whole thing started.

~~~
cjrp
> it would probably tank the market in the very same way that the whole thing
> started.

...allowing them to take advantage for a second time, possibly?

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hidenotslide
Given knowledge of the matching engine (lack of circuit breakers, automatic
margin calls), the number of bids in the limit order book, and the amount of
margin being employed this could have been executed as a purely mechanical
arbitrage.

Of course in a regulated market that would be blatantly illegal.

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Huhty
Why would anyone have an automated process selling LOW? That's bizarre and
just asking for trouble.

~~~
bowmessage
Not many people had that set up explicitly, rather, they were trading on
margin (loaned capital). The value of ETH dropped so low that they were forced
to sell to repay their debts, leaving their accounts empty.

~~~
rjbwork
And they dropped so low because the giant sell order was executed at market
value instead of a limit order... causing the holder in question to also lose
gobs and gobs of potential profit himself. All signs point to one
inexperienced person who bought in at the initial ethereum offering of ~35
cents a coin, and found themselves holding 10 million worth of ETH.

Not knowing how an exchange works, they put the order in for sell 33300 ETH at
market price to cash in their earnings and ride off into the sunset. The buy
book wasn't thick enough to absorb that much sell side @ market, so the market
sells and margin calls ate the entire buy down to the very bottom huge buy @
$0.10 each.

So did the value drop that low? Not really. Just due to a very immature and
primitive market on one particular exchange, did this happen. When you compare
these Crypto-exchanges to modern stock or forex exchanges, you'll see that
they are just vastly less sophisticated.

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GrumpyNl
Please let the bubble pop.

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mattbeckman
"We have recently increased the max amount of margin funding you can take out
on the ETH-USD market to $10,000 USD."

GDAX tweet two days before the glitch:
[https://twitter.com/GDAX/status/876857569850998784](https://twitter.com/GDAX/status/876857569850998784)

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appleflaxen
this is a sensationalized headline - the event in question happened on June
23rd, and was basically a really crummy choice in how Coinbase allowed users
to structure contingency trades.

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dthakur
This situation is usually a trade bust.

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vpribish
clickbait much?

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notadoc
Bubblemania

