OKEx has refuted the Amber AI report which claimed that the exchange was involved in market manipulation. Amber AI, an electronic trading and technology firm, alleged that OKEx, the largest cryptocurrency exchange, was involved in market manipulation. The firm published a blog post yesterday which indicated that the exchange manipulated market prices by forcing an early settlement of Bitcoin cash futures contracts trading on their platform ahead of the Bitcoin Cash [BCH] hard fork. “Over the past week we have seen behavior indicative of market manipulation by OKEx, and estimate $400mm+ of futures contracts have been forced into liquidation as a result,” read the blog post.
OKEx today has retorted against claims made by Amber AI. The exchange stated that, “In the absence of evidence, Amber AI alleged us for trading against our own customers and manipulating the markets. These are completely false allegations and the defamatory statements have caused serious damages to OKEx’s reputation. We reserve all rights to take further legal actions against Amber AI for interfering OKEx’s business.”
OKEx further justified their position saying that the exchange initiated an early settlement of the contracts owing to “market integrity and customer interests”. They further backed the settlement citing the ‘OKEx Futures Trading Users Agreement’ which states, “If market anomalies occur before or after settlement and delivery, which results in wide fluctuation of futures index or abnormal clawback rate, we may postpone or early settlement and delivery as the case may be. We shall post an announcement regarding detailed rules.”
Amber AI gave five reasons to support their claims of the suspected market manipulation by OKEx. As one of the primary arguments the firm quoted the OKEx announcemnet on November 12 which stated “Update on Indices Computation Rules & Indices Constituents for Futures Trading”. According to the blog, this update helped change the rules of the settlement index and reprice the index basis. According to Amber AI this was a deliberate attempt to manipulate the futures prices while the contracts were trading live on the exchange. Also, the blog said that OKEX BCH futures traded limit down causing a 25% discount in the exisiting spot index price of BCH. “296,316.51 BCH worth of contracts settled at $80 higher vs ABC ($330 on Poloniex-ABC vs $408.8 OKEx), bringing the aggregate loss for short-positions in the market to roughly $24mm,” claimed the firm.
As a response to this OKEx in its blog said that it was impossible to create a BCH index settlement price as the BCH index constituents, Coinbase, Binance and OKEx had already paused trading while the hard fork took place. Therefore, they decided to settle the contracts early as they believed that an early settlement was the best option available while the BCH experienced a bear rally.
OKEx went on to discuss about Amber AI. They said that they did not have an institutional client profile named Amber AI, a Hong Kong based company and stated that the exchange doesn’t serve any institutional customers belonging to Hong Kong. The account that Amber AI claimed to be trading with is an individual account and it made a profit with the settlement of the futures contract. Also, the blog also mentioned that the Amber AI account did not have a risk management plan and instead blamed the exchange for its lack of caution.
The Amber AI blog has alleged manipulation of markets by OKEx citing reasons and furnishing proof for those reasons. However, the exchange’s blog has not furnished enough facts to refute all the allegations posted by Amber AI. As a reassurance to traders OKEx in its blog declared, “We reaffirm that we will NEVER trade against our customers and manipulate the market.” It also said that it has enough proof to show the court that it is not involved in market manipulation. If the Amber AI-OKEx battle reaches the court, the proceedings can get ugly.