BitMEX Explains Why Bitcoin Nearly Hit $0 Last Week, Pays Out $200K

The meltdown at derivatives giant BitMEX, during which Bitcoin (BTC) fell to $3,600, has seen the company payout compensation worth a modest $200,000.

In a blog post about the event, which occurred on March 13, BitMEX blamed “two DDoS attacks” for crashing its platform.

Ethereum traders see 40 BTC refunded

Coming at a time of intense volatility across Bitcoin markets, a botnet managed to consume hardware resources, ultimately causing BitMEX to fail altogether and go offline for around half an hour. 

As a result, many users claimed that they had lost funds via liquidations that should not have occurred. BTC/USD, meanwhile, could have hit $0 if the vicious circle, which the attack triggered had continued, one researcher claimed.

“As part of our internal post mortem, the BitMEX team identified 156 accounts for which Last Price stops were clearly erroneously triggered on ETHUSD, caused by the unintended late processing of market orders during the first downtime at 02:16 UTC,” CEO Arthur Hayes confirmed. 

“For each stop that triggered erroneously during this period, BitMEX calculated the delta to the printed Index Price and refunded the user. A total of 40.297 XBT was refunded.”

At current levels, the refunds equate to $217,800.

Community to Hayes: “Nice try”

Hayes added that developers were working to shore up the platform’s operations in an attempt to shield it from further DDoS attacks while acknowledging that “no system is immune” to such a threat.

Reacting, suspicions continued to run high, with Twitter-based analyst Armin van Bitcoin giving Hayes little room for maneuver.

“Ain’t gonna work here. Nice try though,” he responded to the blog post. 

Additional questions center on BitMEX’s giant insurance fund, which only temporarily decreased in size last week before hitting fresh all-time highs of 36,493 BTC ($197.5 million). The fund, critics argue, should have been used to stem user losses. 

Addressing the issue, Hayes also took the opportunity to deny accusations that BitMEX had deliberately crashed its own systems.

“We operate a fair and efficient platform. Trading downtime degrades the experience for all customers and reduces our stature in the market. It would be against our own interests to fabricate downtime,” he concluded. 

“That said, it is clear that the community wants to know more about how liquidations interact with the insurance fund, especially in this very demanding scenario. We will share more details about this very soon.”