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Bitget Takes Legal Action After $20 Million Exploit
Bitget has initiated legal proceedings against eight accounts believed to have exploited its VOXEL futures market, resulting in a staggering US$20 million (approximately AU$31 million) loss. Following the incident, the platform froze the implicated accounts and retracted several trades.
Legal Actions and Allegations
On April 27, Xie Jiayin, Bitget’s head of operations in China, confirmed that legal communications are being dispatched to the eight accused parties. These traders are alleged to have manipulated Bitget’s trading systems to gain over US$20 million before the exchange took swift action to halt trading and investigate the situation further.
Jiayin made a strong declaration via X (formerly Twitter), asserting:
“These eight accounts are the main instigators of the VOXEL incident and have improperly gained more than $20 million.”
Triggering the Incident
The turmoil began on April 20, when the price of VOXEL, the native token for the Polygon-based game Voxie Tactics, surged dramatically by over 560%, climbing from US$0.021 (AU$0.033) to US$0.139 (AU$0.22). This rapid increase quickly turned to volatility as the price plummeted back down to US$0.074 (AU$0.012), as reported by CoinGecko.
The sudden spikes in trading volume and unusual price movements raised flags within Bitget, prompting the exchange to suspend trading, deposits, and withdrawals on certain accounts.
Response and Recovery Efforts
Although a thorough investigation is forthcoming, Bitget has pledged to return any funds recovered through an upcoming airdrop to affected users. Preliminary analyses hint at a potential flaw in the market maker bot, which savvy traders might have exploited using high-leverage trades—a tactic that went undetected by Bitget before the exploit unfolded.
This unfortunate event has cast shadows over Bitget’s credibility, especially in light of CEO Gracy Chen’s earlier criticism of competing exchanges. Recently, she had condemned decentralised exchange Hyperliquid for its handling of a US$6.2 million (AU$9.6 million) exploit involving the JELLY token, labelling their response as “immature, unethical, and unprofessional.” Chen cautioned that without corrective actions, Hyperliquid could risk becoming “FTX 2.0.”
Controversies and Market Trust
Now, Bitget finds itself embroiled in a situation that parallels the challenges it previously denounced in rival exchanges. In response to inquiries about the legitimacy of its operations, Xie Jiayin asserted that “all major market makers in the world have settled in Bitget,” though he refrained from disclosing the names of these entities, citing confidentiality concerns. This lack of transparency does little to reassure a community already uneasy following recent events.
Conclusion
The impacts of the VOXEL exploit extend beyond financial loss, raising significant concerns about the robustness of Bitget’s internal controls. The outcome of the ongoing investigation and the effectiveness of their planned recovery will undoubtedly influence the exchange’s reputation in the competitive cryptocurrency landscape. As Bitget navigates this turbulent situation, the broader implications for market integrity and user trust remain to be seen.
