A false alert triggered panic and an 8% crash in Bitcoin's price, wiping out $1.3 billion in aggregate open interest in the cryptocurrency.
The alert in question claimed that Mt. Gox and US Government wallets had begun to move, causing a stir on social media platforms and sparking a new wave of panic selling.
Arkham had fixed a bug related to Bitcoin alerts, no longer under-sending alerts to a small subset of users' private labels.
The company stressed that the fix would not affect any additional users and urged users to double-check and verify on-chain information before making any moves based on the alerts.
In response to the controversy, Arkham conducted an investigation and determined that the alerts were sent accurately in this case.The company revealed that DB, a popular crypto news account on Twitter, had set two alerts on all Bitcoin transactions above $10,000 USD with no counterparties set, and then named the alerts "Mt. Gox" and "US Gov."
When the bug was fixed, DB began receiving the alerts he had previously set, leading to confusion.
Was the alert to blame?
Arkham claimed that neither the alert nor the tweet could have caused the sharp Bitcoin price drop, as the drop occurred between 19:17 and 20:01 UTC, and the alerts and tweet were sent afterward at 20:07 UTC and 20:08 UTC, respectively.
However, it is likely that the alert caused a new wave of panic selling.
The connection between the false alert and the Bitcoin crash remains unclear, but the timing suggests a possible correlation.