Delphi Digital Co-Founder Yan Liberman joined CoinDesk’s Brad Keoun on Monday, Nov. 4, to talk about last week’s flash crash on Deribit, a Netherlands-based cryptocurrency exchange, and the outlook for bitcoin.
(The following is an edited transcript.)
Brad Keoun: We’re here today with Yan Liberman. He’s co-founder of Delphi Digital, which is a research firm founded in August 2018 focusing on cryptocurrency markets. Previously, Yan was an associate with Deutsche Bank and also an equity research associate with Bloomberg LP. He first dipped his toes into the crypto markets a few years ago. And loved it so much that he decided to start his own research shop. Yan, thank you so much for joining us today. We want to first start with some of the news in this market that came late last week. We had some pretty serious glitches on some of the bigger cryptocurrency exchanges. Can you tell us, from your perspective, what happened there?
Yan Liberman: Sure, it seems like there was a mispricing with the Deribit index. Which caused the index price to shoot down about 2000 points to 7200. And because all the derivatives contracts are priced off of that index, it caused this massive flood of liquidations where, you know, a lot of longs got liquidated because the price tanked. And so because of this massive liquidation, they have to do about $1.3 million worth of reimbursements for all those.
BK: What about that $1.3 million? That’s a lot of money to pay for what appears to just be a snafu. What do you think about that?
YL: Yeah, it is. And they’re actually also paying it off their balance sheet. Not, you know, through their insurance fund. Which makes it considerably more painful in that respect.
BK: And what does that say? I mean, does that show how competitive this market is, for the business of exchanges, or does it show how profitable this industry is?
YL: I think it’s a combination of all that. You have to realize that there’s a lot of…