Coinbase, a stock exchange for the cryptocurrency Ethereum has announced that it will be reimbursing all losses from a recent flash crash last week.

On Wednesday 21 June at around 8.30pm BST (12.30pm PT), the price of Ethereum (ETH) slipped by 29.4% from ETH$320 ($85,163, £66,879) to ETH$224.48 within just a few seconds, causing around 800 stop loss orders and margin funding liquidations. At the same time, ETH began to trade at prices as low as $0.10.

If you were trying to buy Ethereum at the precise time of the crash, this would have been really good for you, however, if you were looking to sell, or you had borrowed money to let you bet on the price rising (known as margin funding liquidation), then things would have been pretty bad.

The flash crash wasn't caused by any nefarious activities – it was simply a multimillion dollar market sell order, which meant that ETH would be bought and sold at whatever the price being offered by bidders until the whole order was filled.

It is not known if the seller knew what their trade would do to the market, or perhaps they didn't care, but the end result was that the price of ETH fell dramatically and likely upset a lot of people.

Coinbase to reimburse all losses

Initially Coinbase said that it had to honour all of the orders as it is "critical to maintaining the integrity of an exchange", but on Friday 24 June it changed its mind.

"We are confident that all trades this week were executed properly, however, some customers did not receive the quality of service we strive to provide and we want to do better," Coinbase's vice president Adam White wrote in a blog post.

"We will establish a process to credit customer accounts which experienced a margin call or stop loss order executed on the GDAX ETH-USD order book as a direct result of the rapid price movement at 12.30pm PT on June 21, 2017."

The process means that Coinbase will reimburse all affected customers who had margin calls or stop loss orders executed using company funds. At the same time, for customers who had buy orders filled (i.e. they were lucky enough to purchase the cryptocurrency at a low price), the exchange will honour all executed orders, and will not be reversing any trades.

"We view this as an opportunity to demonstrate our long-term commitment to our customers and belief in the future of this industry. We will follow up directly with affected customers about this process next week," White stressed.