Ethereum flash crash!

Wow! What happened with ethereum?

Reposted from zerohedge.com

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Ethereum Flash Crashes By 96% After Status ICO Clogs Network

by Tyler Durden
Jun 21, 2017 4:27 PM
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While Bitcoin, and recent Chinese and Korean momentum favorite, Litecoin, have been relatively stable for much of the day, Ethereum suffered dramatic losses on Wednesday, sliding from $360 to $260 before rebounding, in the process experiencing what may have been its first flash crash, when it plunged by 96% from $315 to $13 on massive volume, before rebounding.

The crash appears to have been catalyzed by seller submitting a market order to dump roughly $30 million worth of ETH (96.1k) in one go, which obliterated the order book.

As tends to happen without fail during volatile crypto-periods, the crash almost immediately took the Coinbase offline.

Over the past 24 hours, there were several warnings about "unstable operation" in the Ethereum Network, such as this one from the BTC-E exchange.

What catalyzed today's crash?

According to one explanation posted on the Ethereum reddit, the reason was an ICO, or initial coin offering, gone very wrong. As user emansipater explained around noon, or shortly before the selling onslaught began, the catalyst for the selling was the "badly designed" Status ICO. Here are the detail:

I assume that (unlike all the price discussion here which is totally offtopic) you are referring to the transaction issues which have led several exchanges to pause ETH withdrawals. Here is what happened:

The badly designed Status ICO clogged up the network yesterday with a huge number of high gas fee transactions, most of which are failing but still filling up the blocks and preventing normal tx's from getting in.

In addition, dwarfpool and perhaps others have set bad defaults on their client software that both actually cost themselves money and also prevent the network from automatically adapting to larger gas volumes the way it's supposed to.

Furthermore, evidence is accumulating that f2pool was actively manipulating transactions bound for the Status ICO, which they participated in themselves, exacerbating the problem. Experts explained weeks ago that bad ICO designs are vulnerable to such attacks, but this appears to be the first time it was actually executed in the wild.

So now, even though the Status ICO is over, there are still a huge number of transactions clogging up the network and the only way to get transactions in is to pay huge fees (which most of the exchanges probably don't want to do). Until it clears out, people are going to be missing ENS auctions, unable to withdraw from many wallets and exchanges, etc. etc. etc.
Or, as he summarized "badly designed ICOs, plus selfish and foolish miners = major delays and maybe even substantial losses for everyone else." Judging by the ensuing flash crash, this was an accurate assessment.

The good news for ETH fans is that once the backlog of transactions clears up, the crypto should resume its previous ways.

Finally, here is a vivid example why one should never use stop sell orders in fragmented and unstable markets, from another reddit user.

GDAX just sold a good chunk of my ether at 10 cents each!

So I had a stop order at 316, when GDAX went down (for whatever reason) all my ether was sold at the highest (at the time) price available. When I logged in I saw a small USD amount, I though it was a hiccup. Checked the fills and indeed it was sold at 10 cents. There is no way this will be reversed right? If that's the case I believe I will be leaving the crypto market at least until it stabilizes.
Just lost 3k in the blink of an eye.
And another similar, if unconfirmed report: