One of the largest crypto exchanges in Southeast Asia cites Bitcoin’s technological glitch for dipping to 300,000 PHP, approximately $6,100, on Feb. 16.
An undisclosed number of Philippine Digital Assets Exchange (PDAX) customers managed to purchase thousands of BTCs from the exchange at a huge discount, making them local currency billionaires on paper—at least for a few hours.
A number of PDAX customers removed their bought Bitcoin up to an exchange limit of one BTC every 24 hours on individual accounts. PDAX is stated to ask these users to refund the BTC collected during the crash under threat of future legal action.
The tech glitch led to a 36-hour lockout, and many users appear to complain being locked out of their accounts.
Still unable to login for 7 days straight now. They're trying to cover up something fishy here. I also heard from many of the users that their transactions was reversed by pdax during the downtime. They're obviously lying because many still couldn't access their accounts.— 🚫 (@drumseth) February 22, 2021
One person who managed to buy Bitcoin as it fell to 300,000 PHP from 2.4 million PHP took Reddit to inquire for advice about whether or not they were technically obliged to refund the Bitcoin and got mixed feedback.
“I managed to transfer the purchased BTC to another wallet outside of PDAX just before the trade was closed and the website was finally closed,” the Redditor explained in a post 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 February 23, PDAX CEO Nichel Gaba arranged a press conference to better explain what had transpired the week before. He clarified that the pressure on the sharing of unexpected events created a glitch that enabled the unfunded order to be balanced with the financed order. According to Gaba, this led to a ripple impact that lowered BTC’s price below fair amounts.
“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 points out that of all swap users, only “0.2% are unable to access their accounts” as of Feb. 23.
Established in 2019, PDAX is authorised to act as a central bank in the Philippines. Closing of the exchange on Feb. 16 happened at a crucial period in Bitcoin’s history when the price rose past $50k for the first time.
PDAX is not alone in its task of rising to satisfy the demand of its customers, as Coinbase and Binance have both encountered service outages this year.