The unfortunate event was highlighted by a Twitter user, Su Zhu, a cryptocurrency commentator and CEO/CIO at Three Arrows Capital. The tweet read:
The purchase which was taken on the Binance exchange is certainly a costly one. The trader bought the Litecoin at an overpriced value of $100,000, way over the usual trading price of $91. In Fact, the purchase was 1000% times higher than the usual price.
Many see this as a certain error of judgement by a wealthy trader, who instead of using Tether, the most popular US Dollar backed coin, they went with Paxos. Paxos Standard (PAX) is a regulated dollar-anchored stablecoin that was launched in September 2018.
However, this is not the first and it will neither be the last time a grave error like this has been made in the crypto community. The Kraken exchange had a similar situation with their Bitcoin price. Bitcoin had a flash crash, a term that refers to a very fast decline in the value of an asset, from $5400 to about $4400 because of a similar error.
According to reports, WAVES also had an abrupt flash crash in April, forcing its price extremely low. At one time, WAVES was trading at around $0.00052 or 0.0000001 BTC before returning to its regular price.
These events can have positive and negative ramifications for those involved. If you buy small orders, this price drop could be a fruitful time should you buy at the right time. However, if you are an unfortunate soul who has made the mistake or bought at a higher price and were looking to sell, these events could really mess you up.