Credit Suisse CEO Tidjane Thiam on Wednesday defended a controversial product that let traders bet that markets would stay calm.

The Swiss bank’s VelocityShares Daily Inverse VIX Short-Term Exchange-Traded Note US:XIV has been “a legitimate market instrument that serves a purpose,” he told CNBC as his company posted a quarterly loss.

The ETN — which will soon no longer exist after cratering last week — was launched to give traders an opportunity to bet against a rise in the CBOE Volatility Index VIX, -2.38% , also called the VIX or Wall Street’s “fear gauge.”

While pundits such as Jim Cramer have accused XIV and related products of “blowing up” the broader market SPX, -1.11% , Thiam sounded laissez faire on last week’s fireworks:

“ ‘Yes, it has had a lot of attention, because this kind of short vol/long S&P trade was run by a lot of people at their own risk, and it worked well for a long time until it didn’t — which is generally what happens in markets.’ ” — Credit Suisse CEO Tidjane Thiam reflects on XIV and related products

XIV’s huge drop last week resulted in palpable pain for a Reddit group that had been trading the ETN. One group member wrote: “I’ve lost $4 million, 3 years of work and other people’s money.”

XIV’s prospectus told its buyers that it’s a daily trading instrument for sophisticated investors, rather than a long-term investment, Thiam said.

“Because the price can vary so brutally, the prospectus also says that if the price goes down by more than 80%, we can basically close it. So that’s what happened on the 5th. Basically when the VIX went from 17 to 38, the value of that instrument went from 100 to 5. Once you’re at 5, given the structure of the note, there is no prospect of recovery,” the CEO said.

“So the product was basically not usable anymore.”

It’s curtains tomorrow for XIV, according to Thiam. The ETN continues trading until Thursday, and then owners will be paid on Feb. 21, he said. Credit Suisse CS, -2.73% CSGN, -2.42% announced last week that it planned to liquidate the product.

Read:‘Short-volatility Armageddon’ hammers popular funds, could roil market

And see:Warnings for risky volatility bets should be in ‘big, bold 24-point font and in red letters’

Meanwhile, the Securities and Exchange Commission called Credit Suisse last week and questioned the bank about XIV, according to a Wall Street Journal report citing people familiar with the matter.

And more VIX-related headlines could hit on Wednesday. A large number of VIX options are due to expire, and that tends to provoke swings, as an Economist report notes.

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