Reconstructing the entire process of VOXEL's $43 million "profit"

Editor:Wu Says Blockchain

The market maker qntxxx in this VOXEL incident was interviewed by Wu Says. He said that he made a profit of 43 million US dollars through 100 sub-accounts at that time, withdrew about 10 million US dollars, and Binance froze hundreds of thousands of US dollars. He said he would not compromise and had hired a lawyer. He believed that based on the principle of fair trade, he traded from the market, rather than deliberately digging for loopholes to attack BG's server. Therefore, this part of the profit (43 million US dollars) should all belong to their team.

Bitget responded: The professional wool interest group suspected to be associated with these 8 accounts is the main initiator of this VOXEL incident, and has improperly gained more than 20 million US dollars from it. Bitget will distribute 100% of the recovered funds to platform users in the form of airdrops. In addition to these 8 accounts, all other retail users who participated in VOXEL transactions from 16:00 to 16:30 on April 20 and have withdrawn (about 19 million US dollars) have their accounts restored to normal on Wednesday, and will not be held accountable in the future.

The following is an interview with the accused market maker

The audio transcription is done by GPT and may contain errors. Listen to the full podcast:

Xiaoyuzhou:

https://www.xiaoyuzhoufm.com/episodes/680faad38aed253fa313c3ac

YouTube:

https://youtu.be/3sQGNM8S4tQ

Colin Wu: First, could you please tell us about your history? name="7191">qntxxx: There are two people in our team. We started to join the cryptocurrency circle to do high-frequency trading in early 2022. But we may not have done well until the Luna crash. We were a contract market maker on Binance at that time, and made a profit of more than 1 million US dollars. Then we continued to make markets on Binance until the beginning of 2024. In November last year, we began to try to make markets on smaller exchanges such as Bitget and Gate.

Colin Wu: Didn't BG allow external market makers for contracts before?

qntxxx: It actually has no absolute statement. Its spot liquidity is not very good, so if you want to apply for a contract market maker, you have to apply for its spot market maker at the same time. We have been doing this since November 2024. There is an application portal on its official website. Whether it is an individual or an institution, you can apply to be a market maker, and the threshold for passing is also very low, and only requires some proof of trading volume from other exchanges.  

Colin Wu: Back to the core question, how did you discover this opportunity that day, and what strategy did you adopt?

qntxxx: When the market is not volatile, you can understand it as sideways, our strategy is to hang many targets at the same time, that is, to make many contracts at the same time. But if a certain coin suddenly rises and falls, this is the most suitable scenario for our high-frequency trading profit, so this kind of scenario needs to seize its opportunity, and then increase the order amount and the number of sub-accounts for a transaction.

qntxxx: At that time, we also paid attention to this coin VOXEL, and its trading volume was already quite large, so we also traded this coin. But suddenly we found that its profit was magnified, so we also increased the number of trading sub-accounts, about more than 100.

qntxxx: A similar situation happened in the luna incident, and we also traded hundreds of accounts at the same time. This time is actually a similar incident to luna. There is also a situation where the upper and lower K-lines are randomly hit in its market. The K-line during that period was very consistent with the profit scenario of our strategy, so we made a profit of 43 million US dollars.

Colin Wu: BG said there are 20 million US dollars out there, so are there other market makers?

qntxxx: In the end, we took out about 10 million US dollars, and Binance froze hundreds of thousands of US dollars. There must be other market makers, but the time window was short. 2 of the 9 lawyers' letters were sent to us, and we don't know who the other letters were from, but I think the total amount withdrawn should be more than 20 million US dollars.

(BG responded: Before the risk control measures took effect, the abnormal profit withdrawn from the platform was 38.31 million USDT. Except for the abnormal profit of about 20 million USDT involved in the 8 accounts mentioned above, all other withdrawn funds will never be pursued)

There were only two of us, managing three accounts. At that time, its trading volume increased dramatically, which lasted for more than half an hour, and the coin had not yet triggered risk control, such as stopping trading. For the accounts that made profits later, it first froze some accounts, but after two hours, it resumed withdrawals, and even that night and the next day.

 qntxxx: I think the essence of this matter is that the internal market maker of BG lost to us in the market. I think this is in the principle of fair trading. We traded according to the market, not deliberately digging loopholes to attack BG's server. We traded fairly, so I think our part of the profit (43 million US dollars) should belong to us.

Colin Wu: BG sent you a lawyer's letter. Have you consulted with a lawyer so far?

qntxxx: Yes, the lawyer suggested that we sue their Singapore entity because they deducted money at will. When they rolled back the transaction, many ordinary users' bills were all messed up, and even all the financial management was deducted from you first. After the first wave of rollbacks, many users reported that their bills did not match because the exchange had included the handling fees and deducted more money from the users.

(BG response: The principle of rollback is to correct abnormal profits and losses, so the user's principal and handling fees will not be lost. After the rollback was completed, we found that the handling fees of some users were erroneously deducted, and the handling fees of the relevant accounts have been refunded. No user suffered any loss of principal or handling fees in this incident.)

Colin Wu: There are also views that if this is an exploit of a bug in the exchange, similar to some bank bugs, such as a bank inexplicably overpaying a person with millions, then it may be required to be refunded according to the law.

qntxxx: Our claim is this: BG has not admitted to the outside world that it has participated in the counterparty of users, that is, it has not admitted that they are an official contract market maker. First of all, the majority of users assume that it is only responsible for matching, matching our transactions between buyers and sellers. What we earn is the money lost to us by others. The trading volume of the market is real, and our pending orders are also normal. It is not through some loopholes. It is true that someone is losing money to us on the market. However, if it claims that it is its own loophole, then it needs to produce evidence. It is unreasonable to unilaterally accuse us of using its loophole.  

If it thinks that this is a real loophole and the money in our account is caused by their bug, then these transactions should not really exist.

It is unreasonable for them to claim that we stole. We actually made profits normally and then withdrew the coins. It is not that we hacked into their exchange wallets through hackers. Their risk control and audit teams did not stop us from withdrawing coins.

(BG response: We will release the accident report as soon as possible to restore the truth. As for whether it is suspected of theft, there are also past cases to refer to, such as the case in Maoming City, Guangdong in 2015, case number: (2015) Maonan Faxingchu No. 112)