Bitcoin futures and options exchange Deribit announced some interesting developments which led to the halt of trading on Friday, September 15th. On that date, at around 14:00 UTC, the Deribit liquidation algorithm for portfolio margin users created havoc on the company’s Dec 29 futures contract.

The errors resulted in account bankruptcies amounting to more than 105 BTC (USD $400,000 at yesterday’s rate). Furthermore, various clients had undue losses on their accounts because of the liquidation algorithm failure.

Deribit CEO Johan Jansen, and CMO and Marius Jansen reported that they solved the predicament of the losses by contacting its biggest market makers and traders that have been making profits trading against the malicious algorithm at prices far above the market.

The Deribit team said:

“We are grateful for their understanding of the incident and for their direct support of our exchange.”

“Further, we decided to refill the insurance fund further such that all other traders will remain completely unaffected and no profits will be socialized among other traders in this session at all.”

“This was our first major incident since we opened doors for trading in the summer of 2016. We will work hard now to improve various liquidation algorithms such that this could never occur again. This might further delay the launch of new products like Ethereum futures and our upcoming spot exchange.”

In total, the final loss left for the exchange amounted to around 60 BTC (or USD $235,000 at the time of writing). The company said it will continue to operate as normal and although they are not happy about absorbing the loss, it’s, of course, an amount they can manage.

Lastly worth noting, the Deribit insurance fund will be replenished anew with 25 BTC.

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