Users Asked to Return Bitcoin Purchased After Glitch Drops The Price to $6,000 On This Exchange
- The Philippines-based crypto exchange, Philippines Digital Asset Exchange, or PDAX, experienced a ‘serious glitch’ causing a huge price discrepancy on Bitcoin (BTC) prices, which dropped to $6,000 on Feb 16.
- The exchange halted trading and is asking users to return BTC bought during the 88% price collapse.
On Tuesday last week, the largest Philippines-based crypto exchange, PDAX, suffered a glitch due to the increased user traffic and volumes on the exchange. This led to a system outage, causing the price of Bitcoin to collapse to the $6,000 mark, allowing users to buy the top crypto at a massive discount.
Several unknown users on the platform we're able to cash in on this once-in-a-lifetime opportunity’ making thousands of dollars during that period. PDAX exchange then stopped all trading services on the exchange for 36 hours for a maintenance period before bringing the platform back live on February 18th.
However, in a few hours, the glitch was still active; several users could withdraw their ‘discounted’ Bitcoins up to their set withdrawal limits in a day. In an email sent to the users, PDAX demanded these lucky traders to return the crypto, threatening them with a legal suit if they don’t.
In a press conference held on Tuesday to explain the system outages, CEO Nichel Gaba stated increased trading volumes as the primary reason that the exchange experienced its outage. He further stated that the cause of the huge drop in Bitcoin’s price rose from “unfunded orders” (when one side of an order is not funded) being matched with buyers. Gaba said,
“Because the buyer was able to purchase assets from an unfunded order, the buyer can then resell the same asset via the order book system, resulting in a chain of transactions. Thus the resulting balances of users are a mix of unfunded and funded orders.”
The exchange has since demanded users who bought the discounted BTC return them or face legal action. Gaba agreed that “this was the right thing to do” to protect its integrity and protect the market’s interest. Gaba explained,
“Understandably, a lot of users will feel upset they were able to buy what they thought an order was there for Bitcoin at very low prices.”
“But unfortunately, the underlying Bitcoins were never in the possession of the exchange, so there’s never really anything there to be bought or sold, unfortunately.”
PDAX obtained its crypto exchange clearance license back in 2018 from the Philippines' Central Bank, allowing crypto to Philippines pesos (PHP) conversion. The exchange was the first to offer users direct fiat to crypto trading, including other top cryptos such as Ethereum (ETH), Litecoin (LTC), XRP, and Bitcoin Cash (BCH).
PDAX has grown into an institutional investment hub with top firms getting digital assets exposure through the firm. To boost its roots, PDAX received an undisclosed amount of financial support from ConsenSys and BitMEX to boost its “sphere of influence” in the South-east Asia region.