2020-04-23 USOIL Announcement

To EMX Traders, 

First and foremost, I want to apologize to all our traders who were affected by disruptions in the trading of USOIL on Monday.

EMX is built and run by a small team of dedicated engineers and individuals focused on building an exchange to bridge the world’s markets on one platform, giving global traders access to markets that aren’t easily accessible to everyone.

What happened

We listed our USOIL contract in October of 2019 and have continually traded it without issue, until prices for the front month contract went below 0 on April 20, 2020.  Prices of the physical contract started the day around $18, and traded down to a low of -40.32:

This was a black swan event that not only affected EMX, but other platforms around the world.

We built the platform to be as robust, reliable, and stable as possible.  A negative price edge case was not tested for and thus we had to halt trading of this contract after we noticed prices went negative, which likely prevented forced liquidations for traders who were long.

What it means now

Until we stress test how our matching engine handles negative prices, we will have to close this contract and close any traders with an open position.  There were many ideas that were proposed on how to close positions, each with their pros and cons.  We decided that we will close all traders with an existing open position that were opened on Monday at their average entry price of that day.  This represents the vast majority of open interest.  To the few remaining traders, we will be in touch individually.  

Where will the money come from to make traders whole?  EMX will use its own capital to fulfill its obligation of being a fair and honest exchange.  By doing so, we hope to lead by example and show current and future traders that EMX will do what’s right in the end. 

Going forward

We will update our USOIL index and make it more transparent when we relaunch.  We will stress test negative prices and its effects on our matching engine.  We will be committed to learn from this and win back the trust of our traders. Our amazing engineering, unique contracts, responsive customer service, low fees, and reputable integrity are just some of the reasons for traders to return or new traders to sign up. 

All customer funds are still secure and safely stored at Bitgo and all withdrawals will resume normally at their regularly scheduled time of 20:00 UTC.

Thank you for reading,

Jim

Founder, EMX