Bitget Sues 8 Account Holders Accused of VOXEL Token Price Manipulation, Improper Gains Exceed $20M

Crypto exchange Bitget is pursuing legal action against eight account holders who it claims manipulated the price of perpetual futures contracts linked to the VOXEL token.

The alleged improper gains from this activity exceed $20 million, according to the exchange.

The head of Bitget’s Chinese operations, Xie Jiayin, announced that legal letters would be sent to these account holders in “quick succession.”

This statement was made during a live stream on Friday, April 27.

She added 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 of over $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.

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 told Cointelegraph that the trades involved were between individual market participants. She emphasized that the platform itself was not directly involved in the trading.

Chen also asserted that the losses were not platform-wide and that user funds remained safe throughout the incident. The exchange is still investigating the root cause of the event.

This incident has sparked a discussion about market integrity and risk controls in crypto trading. Some traders have likened the scenario to a casino suing gamblers for winning a jackpot.

When asked about market makers, Xie replied that “all the major market makers in the world have settled in Bitget.” However, she declined to disclose specific market maker identities, citing confidentiality reasons.

Industry Pattern Emerging

This incident is not unique in the crypto trading landscape. 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 decided to delist perpetual futures linked to the JELLY token.

Bitget’s CEO has previously criticized Hyperliquid’s handling of its incident. She described their response as “immature, unethical, and unprofessional,” adding a stark warning that it risked becoming “FTX 2.0.”

In another related development, Binance recently expelled two market maker firms. These firms were implicated in 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 operates its own BGB token.

The exchange has not yet provided further details about who exactly was behind the suspicious activity. It remains unclear 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.