TLDR
- Bitget is taking legal action against eight accounts accused of manipulating VOXEL token futures trading
- The alleged manipulators gained approximately $20 million from the April 20 incident
- Bitget plans to distribute 100% of recovered funds to affected users through airdrops
- The incident involved “abnormal trading activity” that led to VOXEL/USDT trading volume exceeding $12 billion
- Similar incidents occurred at other exchanges including Hyperliquid’s JELLY token issue in March
Crypto exchange Bitget has initiated legal proceedings against eight account holders it accuses of manipulating the price of perpetual futures contracts linked to the VOXEL token, resulting in alleged improper gains of over $20 million.
The exchange’s head of Chinese operations, Xie Jiayin, announced on April 27 that legal letters would be sent to these account holders in “quick succession.” She emphasized that other users who traded VOXEL on April 20 and withdrew funds need not worry, as their accounts have been restored to normal operation.
The incident occurred on April 20 when Bitget detected what it called “abnormal trading activity” on its VOXEL/USDT perpetual futures contract. This led the exchange to pause accounts suspected of market manipulation.
The trading pair recorded an astonishing volume exceeding $12 billion. This figure was much larger than volumes for the same contract on other exchanges like Binance.
After pausing the suspicious activity, Bitget rolled back the irregular trades in an effort to recover the gains. The exchange has now promised to distribute all recovered funds to affected users through airdrops.
The Technical Debate
Some users on social media have suggested the incident resulted from a bug in a market maker bot. This alleged bug caused VOXEL’s excessive trading volume.
Traders who noticed the suspected technical issue early reportedly used high-leverage positions to increase their profits. This approach has been described by some as a zero-cost exploit of the system.
VOXEL is the utility token for Voxies, a free-to-play 3D turn-based tactical RPG game built on the Ethereum blockchain. Following the incident, the token’s price has fallen by approximately 47%.
Bitget CEO Gracy Chen previously informed Cointelegraph that the trades involved were between individual market participants. She stressed that the platform itself was not directly involved in the trading.
Chen also insisted that the losses were not platform-wide and that user funds remained secure throughout the incident. The exchange is still investigating the root cause of the event.
The VOXEL incident has raised questions about market integrity and risk controls in crypto trading. Some traders have compared the situation to casinos suing gamblers for winning jackpots.
When questioned about market makers, Xie responded that “all the major market makers in the world have settled in Bitget.” However, she declined to reveal specific market maker identities, citing confidentiality reasons.
Industry Pattern Emerging
This is not an isolated incident in the crypto trading space. Decentralized exchange Hyperliquid faced a similar situation on March 27.
In that case, a whale allegedly exploited liquidation parameters to profit at least $6.26 million on the Jelly my Jelly (JELLY) memecoin. Hyperliquid has since delisted perpetual futures tied to the JELLY token.
Bitget’s CEO has previously criticized Hyperliquid’s handling of its incident. Chen described their response as “immature, unethical, and unprofessional,” warning it risked becoming “FTX 2.0.”
In yet another related incident, Binance recently expelled two market makers. These firms were linked to price crashes in GPS, SHELL, and MOVE tokens.
Bitget has promised to release a complete report on the VOXEL incident as soon as possible. The company is headquartered in Victoria, Seychelles, and maintains its own BGB token.
The exchange has not provided further details about who exactly was behind the suspicious activity. Questions remain about what specific technical issues may have enabled the alleged manipulation to occur.
Bitget did not immediately respond to requests for additional comment on the ongoing situation.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
