Doubt and Truth: Did Bitget Choose the Hard but Right Path in the VOXEL Incident?
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Doubt and Truth: Did Bitget Choose the Hard but Right Path in the VOXEL Incident?
What truly deserves reflection is how trading platforms can uphold security底线 during expansion, how arbitrageurs can pursue profits without crossing legal红线, and how the entire industry can grow through repeated shocks and recovery.
Navigating Web3 tides with focused insightsAuthor: OneShotBug
1. Background and Analytical Perspective
On April 20, 2025, the global cryptocurrency exchange Bitget experienced a trading anomaly that sparked widespread discussion. Within just thirty minutes, the VOXEL/USDT perpetual contract saw an abnormal price surge and a dramatic spike in trading volume, severely deviating from normal market conditions. Subsequently, Bitget announced it would roll back trades executed during the anomalous period and implemented a series of measures, including freezing involved accounts, recovering illicit gains, and conducting an airdrop to ordinary users.
This incident quickly triggered market debates over whether "transaction rollback is legally and ethically justified" and whether "the platform fulfilled its responsibilities." As a rare large-scale rollback operation in recent years within the crypto space, this response touches upon multiple dimensions—user rights protection, platform risk control, trading ethics, and industry norms.
This article adopts an objective and rational perspective, first reconstructing a comprehensive picture of the event, then analyzing the actions and responsibilities of all parties involved. By reviewing historical rollback cases in traditional financial markets, we will assess the legitimacy of Bitget’s decision to reverse transactions. Ultimately, our goal is to provide readers with a clear, fair basis for judgment, free from emotionally charged controversies.
2. The VOXEL Anomaly: Timeline and Root Cause Analysis
1. Timeline Recap
Between 16:00 and 16:30 (UTC+8) on April 20, 2025, the VOXEL/USDT perpetual contract on Bitget suddenly exhibited extreme volatility. Within 30 minutes, the contract price surged from approximately $0.30 to nearly $1.00—an increase exceeding 230%. Concurrently, trading volume spiked above $12 billion, surpassing even Bitcoin futures to become the most traded contract on the platform. Numerous users engaged in high-frequency trading during this period, resulting in chaotic market sentiment.
2. Description of the Anomaly
During the incident, VOXEL contract prices significantly diverged from fair market value. High-leverage, low-value orders were densely executed, existing limit orders were rapidly swept away, and the order book became extremely thin. Market data showed:
● Trading depth dropped more than 90% compared to normal levels;
● Bid-ask spreads widened to over ten times their usual size;
● Peak prices exhibited a nearly 300% premium over reference spot prices.
Normal trading logic was completely disrupted, with prices exhibiting a "spiral-like unilateral surge." Other assets on the platform also suffered short-term shocks, briefly triggering cascading effects.
3. Preliminary Cause Analysis
Based on official statements from Bitget, analysis by blockchain monitoring firms, and observations from industry experts, the primary causes include:
● Market Maker System Failure: Around 16:00 on April 20, several market-making bots on Bitget experienced technical failures, leaving them unable to provide consistent and rational pricing, which abruptly removed critical liquidity support.
● Exploitation by Arbitrage Groups: Upon detecting the system failure, at least eight professional arbitrage accounts swiftly entered the market, deploying high leverage (some up to 50–100x) to open positions, repeatedly driving up prices before quickly closing them for profit—distorting price discovery further. The qntxxx team, one of the participants, later explained their tactics and past behaviors in an interview.
(See: https://mp.weixin.qq.com/s/wD2uSE_B5Pz0yZfjeo7pLw)
● Inadequate Risk Control Activation: Bitget's risk management systems failed to recognize the abnormal trade structure in time, delaying the activation of circuit breakers or trading restrictions.
In summary, this was a classic compound market event driven by “technical fragility combined with human-driven exploitation.”
4. Bitget’s Response Measures
Following the incident, Bitget initiated emergency protocols and took the following actions (original post: https://x.com/xiejiayinBitget/status/1916475194383688167):
● Transaction Rollback: Reviewed and reversed all trade records for the VOXEL/USDT contract between 16:00 and 16:30 on April 20, canceling approximately $12 billion in abnormal trading volume.
● Account Freezing: Froze eight accounts suspected of malicious arbitrage, totaling over $20 million in frozen funds, and initiated legal proceedings, issuing formal demand letters.
● User Airdrop: Committed to returning 100% of recovered illicit gains directly to affected ordinary users via airdrop.
● System Upgrade and Review: Launched an urgent internal overhaul of its risk control systems and pledged to publish a full incident investigation report along with future improvement plans.
Bitget emphasized that all losses from the incident would be borne internally by the platform, with no liability imposed on regular users. Specifically:
● The rollback aimed only to correct abnormal profits and losses; user principal balances and trading fees remained unaffected. After the rollback, some users had fees incorrectly deducted—these have since been refunded. No user will suffer any loss of capital or fees due to this event.
● Prior to risk controls taking effect, $38.31 million in abnormal profits were successfully withdrawn. Aside from the ~$20 million linked to the eight flagged accounts, all other withdrawn funds will not be pursued.
It is evident that Bitget’s current actions are solely targeted at these eight anomalous accounts, while fully compensating affected ordinary users.
3. Arbitrage Behavior vs. Platform Responsibility: Attribution of Actions
1. Analysis of Arbitrage Group Conduct
In this incident, certain professional arbitrage groups detected the malfunction in Bitget’s market-making system and promptly launched high-frequency, high-leverage trades. They used minimal capital to artificially inflate the VOXEL contract price, creating distorted market conditions, and then exited with substantial profits.
Their strategy did not rely on genuine supply-demand dynamics or legitimate price discovery but instead systematically exploited a known platform vulnerability to obtain disproportionate gains far beyond reasonable market risk.
In traditional finance, such behavior is typically classified as market manipulation or exploitation of system failures—both strictly prohibited. These actions undermine market fairness and directly harm legitimate traders.
Therefore, although superficially compliant with trading mechanisms, such arbitrage lacks ethical and regulatory legitimacy. Bitget’s decisions to reverse trades, freeze accounts, and recover illicit profits align with standard industry practices aimed at preserving transactional fairness under extreme circumstances.
2. Analysis of Bitget’s Actions
(1) Systemic Responsibility
As the operating entity, Bitget revealed significant technical and risk-control shortcomings. Its market-making system failure went undetected, and its risk controls failed to halt runaway price movements, ultimately causing market disorder and real user losses.
For this systemic breakdown, Bitget bears unequivocal direct responsibility. The platform has publicly acknowledged its risk control failure and committed to a thorough system review and upgrade.
(2) Emergency Response
After the incident, Bitget activated emergency procedures, including:
● Rolling back all VOXEL contract trades during the anomalous window;
● Freezing eight suspected arbitrage accounts to prevent fund withdrawal;
● Announcing that all recovered illicit gains would be 100% redistributed to affected retail users via airdrop;
● Clarifying that it would not reclaim legitimate profits made by ordinary users during the anomaly;
● Initiating internal investigations and system improvements, with public disclosure of findings planned.
These measures mitigated the immediate impact on retail users—ensuring no loss of principal, fees, or rightful earnings.
(3) Accountability and Follow-up Actions
While Bitget clearly bears responsibility for the initial system failure, its subsequent remedial steps—such as redistributing recovered funds and refraining from clawing back retail profits—demonstrate a willingness to absorb financial consequences and restore user trust.
From a broader perspective, exchanges in the fast-evolving crypto industry must continuously strengthen pre-event risk prevention, real-time monitoring, and post-event transparency. Only through building mature, self-regulated risk frameworks can similar incidents be effectively prevented.
4. Historical Precedents: Handling Abnormal Trades in Traditional and Crypto Markets
In traditional finance, when technical glitches, system errors, or extreme trades cause prices to deviate drastically from fair value, exchanges routinely cancel, adjust, or roll back abnormal transactions based on established rules. Major cryptocurrency exchanges have faced similar events and applied comparable responses. Exploiting system vulnerabilities for illicit gain has often led to criminal prosecution, recovery of proceeds, and imprisonment.
The following case studies illustrate how mainstream markets handle extreme trading anomalies and the associated legal principles.
1. May 6, 2010 U.S. Stock Market "Flash Crash"
On May 6, 2010, the U.S. stock market experienced a historic "flash crash": the Dow Jones Industrial Average plunged nearly 1,000 points in five minutes, erasing about $1 trillion in market value. Investigations revealed that a large mutual fund (Waddell & Reed) executed massive algorithmic futures sales, while high-frequency traders exacerbated volatility through rapid round-trip trades.
British trader Navinder Singh Sarao employed "spoofing" strategies—placing large fake orders to create false liquidity—amplifying the collapse. Individual stocks like Procter & Gamble temporarily dropped nearly 37%.
Following the crash, the SEC and CFTC jointly investigated and invoked the "clearly erroneous" rule to cancel over 6,000 abnormal trades. Regulators later introduced circuit breakers to prevent future recurrences.
2. June 2015 Deutsche Bank "Fat Finger" Error
In June 2015, a junior employee at Deutsche Bank mistakenly transferred $6 billion to a U.S. hedge fund client after confusing "net" with "gross" payment terms. The error occurred while the supervising manager was on leave.
The bank discovered the mistake the next day and successfully recovered the full amount. It reported the incident to regulators including the UK’s FCA, ECB, and the U.S. Federal Reserve. The event exposed weaknesses in operational controls and lack of automated detection systems.
Under new CEO John Cryan, Deutsche Bank launched major reforms to streamline operations, improve efficiency, and enhance risk management.
3. June 2024 NYSE Technical Glitch Affecting Berkshire Hathaway and Others
On June 3, 2024, a technical fault at the New York Stock Exchange caused abnormal price movements in several stocks, including Berkshire Hathaway Class A shares. The stock briefly crashed from over $620,000 to $185.10—a 99.97% drop—that lasted about two hours with over 3,000 shares traded.
The root cause was an incorrect price band issued by the Consolidated Tape Association (CTA), triggering the Limit Up-Limit Down (LULD) mechanism and halting trading in multiple securities. CTA attributed the issue to a software update and resolved it by switching to a backup system.
NYSE subsequently declared invalid all trades in Berkshire A shares executed between 9:50 and 9:51 AM Eastern Time at or below $603,718.30, stating traders had no right to appeal.
Other affected stocks included Barrick Gold, NuScale Power, and Chipotle, all experiencing similar anomalies and trading halts.
4. 2015 Maonan District Case: Zhang Peng’s Exploitation of System Vulnerability
In 2015, the Maonan District People’s Court in Maoming City tried a case involving illegal profit-taking via a virtual asset platform vulnerability (Case No.: (2015) Maonan Fa Xing Chu Zi No. 112).
The court found that in March 2014, defendant Zhang Peng discovered a flaw in a virtual currency platform allowing him to double funds by placing and canceling orders. He registered multiple UID accounts and exploited the loophole repeatedly, illegally gaining RMB 141,866. He later transferred the funds to other accounts, purchased Litecoin, and sold them for an additional RMB 103,431 in cash.
The court ruled that Zhang’s actions constituted theft—unlawful appropriation of platform assets through secret means. He was sentenced to three and a half years in prison and fined RMB 10,000.
Summary Comparison:
These cases demonstrate that in traditional finance, when trades are invalidated due to system failures, human errors, or extreme volatility, exchanges routinely cancel or adjust abnormal transactions based on clear rules. Such actions aim to restore market order, uphold fairness, and prevent systemic contagion.
In the VOXEL contract anomaly, Bitget’s response—including transaction rollback, account freezing, and recovery of illicit gains—reflects alignment with traditional market practices in handling extreme anomalies. However, the unique risks of crypto markets underscore the need for stronger preventive controls.
5. Rational Conclusion: Lessons for Risk Management and Institutional Development in Crypto Exchanges
The VOXEL contract anomaly exposed Bitget’s deficiencies in system stability and risk controls. When liquidity evaporated and market makers failed, the platform did not trigger protective mechanisms in time, enabling severe price distortions and arbitrage opportunities.
Post-incident, Bitget implemented corrective measures—rollback, account freezes, user airdrops—to restore order amid chaos. These actions reflect both crisis management experience and areas needing improvement.
Historical precedents in traditional finance consistently show that canceling or rolling back abnormal trades serves to protect market integrity and fairness. Bitget’s approach largely follows this established logic.
Yet the VOXEL incident leaves a distinct mark on the crypto industry. Bitget’s “legal letter controversy” will undoubtedly become a notable chapter in crypto history—not just a clash between technical flaws and human greed, but also a deeper collision at the intersection of legal boundaries and industry culture.
In this episode, simple tribalism is meaningless.
What truly warrants reflection is how exchanges can maintain security while scaling, how arbitrageurs can pursue profits without crossing legal lines, and how the entire industry can grow through cycles of disruption and repair.
Perhaps what matters more than the event itself is how we choose to face the future.
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