BitMEX responds to Bitcoin crash day outage, stating that the liquidation mechanism is not the issue: main cause was a DDoS attack.

On March 12th, Bitcoin plummeted to $3,600 on BitMEX, marking the largest single-day drop since 2013, with over $1.2 billion in long positions liquidated. Following the temporary trading halt on BitMEX, Bitcoin started to rise. The CEO of FTX pointed out certain issues with the platform's liquidation mechanism, sparking conspiracy theories within the cryptocurrency community.

• FTX CEO Claims BitMEX Did Not Shut Down, Bitcoin Will Go to Zero
• Experienced Large-Scale DDoS Attacks Twice in One Day

A few days after the incident, BitMEX founder Arthur Hayes finally addressed the public's doubts by releasing a research report on their blog, claiming to have experienced two distributed denial-of-service (DDoS) attacks on the day of the incident and continuing to investigate post-attack. The summary is as follows:

[Note] A denial-of-service attack (DoS) sends a large number of requests to the target, causing the target system (website or application) to be overwhelmed, leading to service interruption or stoppage. A distributed denial-of-service attack (DDoS) occurs when attackers use multiple hijacked, controlled computers to launch the attack.

1. At UTC 02:16, BitMEX experienced the first DDoS attack of the day. We later discovered that the botnet had attempted to attack on February 15, indicating that the attackers had already targeted BitMEX and patiently waited for market volatility to maximize the attack's impact.
2. During peak market volatility, the botnet overwhelmed the platform through attacks on the chat query function (Trollbox).
3. Our security team observed the database CPU usage reaching 100%, with 99.6% in an idle state. At the time, we mistakenly thought it was a hard drive failure.
4. The DDoS attack slowed down the API operation speed, causing delays in the trading engine.
5. We were attacked again 10 hours later at UTC 12:56 and learned from the first attack, manually clearing the queue to restore system operations.
6. Real-time status updates from BitMEX are published on https://status.bitmex.com.
7. Subsequent internal evaluations revealed that the ETHUSD trading pair had accidentally triggered stop-loss prices during this period, caused by order delays from the first shutdown, affecting 156 users. BitMEX has calculated the amount and refunded 40.297 XBT.

BitMEX emphasized:

DDoS attacks are not hackers and do not pose a threat to user data. While no system can fully resist DDoS attacks, there are many technologies that can significantly reduce their impact, and potential issues have been addressed. The team is also developing protocols for public aspects such as shutdowns, trading halts, resuming trading, and user communication to provide greater transparency to users in the event of future interruptions.

The cryptocurrency industry is closely watching the BitMEX shutdown and mass liquidation incidents. FTX founder Sam Bankman-Fried stated on Twitter that "if BitMEX does not shut down, it may crash Bitcoin to zero," causing concern among users.

1) Insane theory of the day: there was no BitMEX hardware issue.

— SBF (@SBF_FTX) March 13, 2020

Regarding comments from Sam Bankman-Fried, a major competitor in derivative exchanges, BitMEX responded:

BitMEX is a fair and efficient platform. Suspending trading would reduce the experience for all users and diminish our market position, so a shutdown would be completely against our own interests. After this incident, we understand that users want more information about liquidation and the insurance fund, and we will soon release more detailed information.

Despite the controversy, the BitMEX platform seems to have not been significantly affected, ranking third in futures trading volume in the past 24 hours, behind only Okex and Huobi, with Binance slightly trailing BitMEX.

Related Reading

• "March 12" - Crypto Doomsday, Records Broken (Continuously Updated)
• Will High Leverage Contracts Crash Bitcoin to Zero? What Went Wrong with BitMEX Shutdown that Stopped the Price Drop?

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