- Blockchain analytics firm Arkham Intelligence denies any role in the recent flash crash of Bitcoin, which saw a 7% drop in less than an hour.
- The crash occurred on April 26, and media outlets initially reported it was due to an incorrect alert sent by Arkham Intelligence regarding wallets linked to Mt. Gox and the U.S. government shifting large sums of Bitcoin.
Arkham Intelligence denies involvement in flash crash
Blockchain analytics firm Arkham Intelligence has denied playing a role in the flash crash that saw Bitcoin fall 7% in less than an hour. The crash occurred on April 26 and was initially attributed to an incorrect alert sent by Arkham Intelligence regarding wallets linked to Mt. Gox and the U.S. government shifting large sums of Bitcoin. However, Arkham Intelligence denies this claim, stating that its alerts were sent accurately, and the crash happened before the alerts and subsequent tweets were sent.
[DB] Mt Gox and US Govt Wallets Making Transactions: Arkham Alert
— db (@tier10k) April 26, 2023
Furthermore, data from Twitter user IT Tech shows that there have been no transfers from the wallets associated with Mt. Gox, suggesting that the flash crash could have occurred due to unknown reasons.
🛑FAKE NEWS🛑about MT Gox wallets making transactions.
— IT Tech (@IT_Tech_PL) April 26, 2023
Impact on the derivatives market
Regardless of what caused the flash crash, the sudden and steep decline in prices wreaked havoc on the derivatives market, with the total sum of liquidations for crypto market participants topping $211 million at present. Bitcoin traders accounted for nearly $97 million worth of these liquidations.
Arkham Intelligence clarifies alert error
Although popular crypto news alert account DB or Tier10k tweeted an Arkham Intelligence alert, the latter stated that the alert was erroneously sent to a small subset of users, which included DB. Arkham Intelligence also explained that they had just fixed a bug related to Bitcoin alerts, which made them no longer send alerts to users. The company stated that DB had earlier set alerts on Bitcoin transactions above $10,000, with names “Mt Gox” and “US Gov.”
We have conducted an investigation of the DB Alert situation, and determined that the Arkham alerts were sent accurately in this case.
DB set two alerts on all Bitcoin transactions above $10k USD, with no counterparties set, then named the alerts “Mt Gox” and “US Gov”.
When we… pic.twitter.com/8OITiygNhL
— Arkham (@ArkhamIntel) April 26, 2023
Hence, when the bug was fixed, users received the alerts set previously. No one received inaccurate alerts, they simply began receiving the alerts they had previously set.
Possible implications for crypto market regulations
Although it is entirely possible that the Bitcoin price crash happened irrespective of the erroneous Arkham alerts, incidents like these could give regulators further scope for tightening laws on crypto market transactions. Therefore, it is essential for companies like Arkham Intelligence to exercise utmost caution while disseminating alerts and information related to the cryptocurrency market.