Raiblocks (XRB) drops over 30% in hours after BitGrail freeze
RaiBlocks' biggest enthusiasts may have accidentally "fudded" themselves out of US$800 million in market cap.
Fudding, verb: To spread fear, uncertainty and doubt with damaging results.
RaiBlocks (XRB) dropped by over 30% in 6 hours on 30 January, according to CoinMarketCap. It dropped from around US$19 to $13 in a few hours (almost US$800m in market cap), then ricocheted back to over US$16 in another few hours. At the time of writing it's showing a -17.4% change in the last 24 hours and trading at $15.
RaiBlocks' unique architecture involves a separate blockchain for each account. This makes transactions fast and free and largely immunises RaiBlocks against scaling issues, but also makes it difficult to effectively integrate onto large cryptocurrency exchanges.
The end result is a relatively popular coin confined to an unusually small list of exchanges. This means relatively minor events can have outsized effects on its prices.
In this case, it was a change at BitGrail. It's a relatively unknown exchange, but it still accounted for about a third of RaiBlocks' daily trade volume, while XRB accounted for the bulk of BitGrail's daily volume.
According to RaiBlocks users on Reddit, the owner of the Italy-based BitGrail exchange abruptly instituted mandatory KYC (know your customer identity verification) requirements and announced that all non-European traders would have 2 weeks to get their funds off the exchange. This would only be doable by converting the coins to bitcoin and then withdrawing them.
This announcement was accompanied by the immediate price drop as non-European traders on the exchanges started shedding XRB for BTC. Immediate speculation centred around scam accusations, and many RaiBlocks users started venting at the owner of BitGrail and threatening lawsuits.
In response, the BitGrail owner posted the following statement on Twitter.
As the dust settled, the RaiBlocks community realised that they might have overreacted, with one user giving the following rundown.
- EU verified – You're good, you can use Bitgrail going forward!
- EU unverified – You'll need to submit verification docs
- Non-EU pending verification – You need to wait for verification and then will have a 2 week grace period for withdrawal
It sounds like everything is not as bad as we thought. I even double checked the Bitgrail accounts, and all the XRB is still there, not stolen via hack as some people have mentioned."
At the time of writing, RaiBlocks prices are still markedly down along with the rest of the cryptocurrency market and XRB users are examining the possibility of bringing legal action against BitGrail.
- BitGrail announced that it would be implementing KYC procedures and barring non-Euro traders to better comply with the law.
- RaiBlocks enthusiasts immediately panicked and started sharing unfounded rumours, causing prices to plummet.
- RaiBlocks enthusiasts start examining their legal options, to seek compensation for the perceived value that was lost in their panic.
In the future, RaiBlocks might enjoy further price growth once it eventually becomes available on Binance.