PDAX Exchange demands users return Bitcoin bought for $6K during glitch

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An apparent “glitch” on PDAX dropped Bitcoin price by 88% and saw trading suspended. The exchange held a press conference yesterday to say what happened.

One of Southeast Asia’s biggest cryptocurrency exchanges is blaming a technical glitch for the price of Bitcoin dropping down to 300,000 PHP, roughly $6,100, on Feb. 16. 

A number of customers of the Philippine Digital Assets Exchange, or PDAX, managed to purchase thousands of BTC from the exchange at a huge discount, making them local currency billionaires on paper — at least for a few hours.

A number of PDAX users withdrew their purchased Bitcoin, up to the exchange’s limit on individual accounts of one BTC per 24 hours. PDAX is reportedly demanding these clients refund BTC obtained during the crash under the threat of potential legal action.

The tech glitch resulted in a 36 hour closure, and several clients continue to report remaining locked outside of their accounts.

One user, who managed to buy Bitcoin when it dropped to 300,000 PHP from 2.4 million PHP, took to Reddit to ask for opinions on whether or not they have return the Bitcoin, receiving an outpouring of mixed responses.

“I managed to transfer the purchased BTC to another wallet outside PDAX just before they closed the trading and eventually the website,” the Redditor explained in a thread on r/phinvest.

“After almost 24 hours, they sent me a demand letter and SMS, requesting me to transfer back the BTC, which was purchased well within my rights without violating any laws or regulations of the trading platform, or they ‘may’ be compelled to take legal actions against me.”

On Feb. 23, PDAX CEO Nichel Gaba held a press conference to further explain what had happened the week prior. He explained that the burden placed on the exchange by a flurry of unanticipated activity had introduced a glitch that enabled an unfunded order to be matched with a funded order. According to Gaba, this led to a cascade effect that dropped the price of BTC below reasonable levels.

“It’s very understandable that 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.”

Gaba stressed that of all the exchange’s clients, only “0.2% are unable to access their accounts” as of Feb. 23. .

Founded in 2019, PDAX is licensed to operate as an exchange by the Philippines central bank. The exchange’s Feb. 16 closure occurred during a pivotal moment in Bitcoin’s history as its price surged above $50k for the first time.

PDAX is not alone in its challenge of growing to meet the demand of its users, as Coinbase and Binance also suffered service outages this year.

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