Today, Huobi announced how to deal with the abnormal price of some leverages before, and said that this situation was internally defined as an accident. Huobi said that it will suspend the new leveraged lending functions of ELA, RUFF, NAS, and DTA, and reduce the price difference ratio of liquidation circuit breaker from the original 15% to 10%. For users who exceed the circuit breaker threshold and still liquidate their positions, Huobi will pay the principal.
Huobi announced that:
This time, due to the fact that some of the above currencies of Huobi Pro account for a large weight in the market, the global weighted average price will be dominated by the price of Huobi Pro. for accident.
The following improvements have been made in this regard:
1. Suspend the newly added leveraged lending functions of ELA, RUFF, NAS, and DTA.
2. Reduce the price difference ratio of liquidation circuit breaker from the original 15% to 10%.
It can be seen that Huobi wants to use its platform early warning mechanism to reduce user risks. In addition, Huobi also stated that the platform will not bear any compensation responsibility for losses caused by users’ normal investment judgment mistakes; and for non-force majeure accidents caused by platform negligence, Huobi will use the investor protection fund to pay compensation.
Conditions for receiving compensation this time:
1. When the user liquidates the position, the price of the exchange currency in Huobi Pro deviates from the average price of other markets by more than 15%, which is an unreasonable price. If the liquidation circuit breaker mechanism is not activated at this time, the Pay principal.
2. The principal of compensation shall be subject to the currency you trade.
3. The principal paid = liquidation amount - loan amount / closing price of the day - net value after liquidation / closing price of the day
From 14:00 to 14:15 on May 12, multiple currencies of DTA\ONT\BTM\IOST on the Huobi Pro platform were quickly pulled back after a short-term plunge, with a drop of more than 50%, causing many users to be liquidated And it was too late to react.
Because at the same time on exchanges such as OKEX and Binance, the currency price did not experience similar fluctuations. Some users questioned Huobis fixed-point liquidation, secretly manipulating, and harvesting retail investors. Some media reported that the amount of losses involved in the liquidation was at least 500 million, and many investors who suffered heavy losses went to the Beijing department of Huobi.com to defend their rights on May 15.
In this regard, Li Lin, the founder of Huobi, once responded in the circle of friends that Huobi will pay the full compensation for the non-force majeure accident caused by the responsibility of the Huobi platform. Will not assume any liability for compensation.
At the same time, Li Lin also added in the same circle of friends: I have not done anything wrong, and I am not afraid of ghosts knocking on the door.
