Filipino crypto investors cry for help over detained assets in PDAX accounts

February 23, 2021 - 6:04 PM
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Bitcoins
Stock photo of bitcoins. (Pixabay/MichaelWuensch)

(Updated at 8:04 p.m.) Some Filipino cryptocurrency investors are still unable to access their accounts on the Philippine Digital Asset Exchange (PDAX) after a major outage of the Bangko Sentral ng Pilipinas-regulated trading platform last week.

Facebook users in a public group commented that they kept receiving an “incorrect password” prompt whenever they try to open their account at the cryptocurrency trading platform.

Investors on Twitter likewise reported encountering the problem, with some fearing that their funds were being held “hostage.”

The downtime remained days after a supposed conversion error committed by a large bitcoin seller, colloquially called a “whale,” that prompted PDAX to take action and shut out users from the platform.

Other online users, responding to a tweet by Manuel Quezon III, likewise shared a screengrab from Facebook showing investors worrying about the inaccessibility of their accounts where they parked their savings.

PDAX previously said it has invalidated orders of unfunded transactions as it vowed to restore full access to all investors.

Nichel Gaba, founder and chief executive officer at PDAX, said an isolated unfunded order found its way onto the system last February 16 and affected the accounts of other users.

He said the trading platform was expected to complete the rest of the supposed restoration by February 22.

A day after, there were still reports of investors failing to get a hold of their accounts.

Gaba said the issue is not unique to PDAX and added that Coinbase and Kraken have also experienced outages in light of shifts in online financial behavior amid the coronavirus pandemic.

In an interview with Manila Bulletin’s Art Samaniego, Gaba said that when bitcoin surged to another all-time high that caused a surge of trading and account opening activity. “It was during a time when we were experiencing… an unusual level activity that led to this glitch.”

What happened on PDAX?

PDAX is a cryptocurrency exchange platform where Filipinos can buy and sell bitcoin and other digital coins. It is similar to other web-based brokerages for stocks and other securities, but specializing in cryptocurrency.

Traders and investors on PDAX are able to buy fractional coins. These are partial pieces of any cryptocurrency such as bitcoin for those who can’t afford to buy a whole coin.

Since the price of 1 bitcoin is around $46,000 upward or P2.2 million as of posting time, those who can only buy $1,000 worth can have 2.17% of a single bitcoin or 0.0217 bitcoin.

On February 16, a “whale” which is an individual or company holding a large amount of bitcoin, sold its bitcoins on PDAX in exchange for Philippine pesos. The total dump, according to descriptions of platform users that day, was worth more than $5.3 billion or P257 billion worth of bitcoins.

However, the whale made a mistake in selling each bitcoin for P300,000 instead of more than P2.5 million, which was its price that weekend when the cryptocurrency was at an all-time high at more than $50,000 per bitcoin.

Gaba added that the large selling transaction on the exchange was not funded. “What happens is it will get matched against other orders but the orders for people to buy, if you’re buying bitcoin from that sell order, you would actually not buying anything because nothing was delivered to the platform.”

He likened it to a real market purchase for an item where the seller does not hand over the purchase good. “The right thing to do was to invalidate the transaction, and for you as a buyer, to get your money back,” he added.

Assuring that their funds and assets are intact, Gaba said the number of users who are still unable to access their accounts is now a small percentage. Outside the CEO’s interview, however, investors are still demanding a notification from the PDAX.

“When we can access our account? We are still more still cannot access our account.. until when we need to wait? Give us specific time and date so that we are not wasting our time to check if we can access already. Please pdax team be professional!” wrote one.

PDAX comments section
Screenshot by of PDAX Facebook page’s comments section as of 8:01 p.m. on Feb. 23, 2020

One investor whom Interaksyon reached out to said the platform sent them no clear explanation for the days-long interruption.

“They just said it’s a system maintenance,” @mikel_pangan wrote. “It was only available for a very short period after the 36-hour fix they mentioned. We cannot cash out, even if they reversed the [bitcoin] purchase.”

“Shortly after trying to cash out, the system locked us out again and cannot be accessed till now,” the PDAX investor added.

Bitcoin drop
Courtesy of Trading View. Screenshot by Interaksyon as of Feb. 23, 2020 at 7:30 p.m.

Bitcoin’s price drastically dropped Tuesday to $46,000 level after a rapid run to a new high of $58,000 last Sunday. — With reports from Camille Diola