- Paradex to reverse trades after error causes thousands to liquidate.
- User funds are safe, says a message on the project’s website.
- The incident shook investor confidence.
Paradex will reverse thousands of trades after an error sent prices on the perpetual futures exchange to zero, leading to massive liquidations.
Shortly after platform maintenance at around 4:30 a.m. London time, thousands of transactions on the platform were liquidated within seconds, with reports on social media and videos viewed by DL News showed.
Three hours later, Clement Ho, Paradex’s director of engineering, addressed panicked users in a Discord message.
“We have identified the issue and will restore the channel state to block 1604710 (4:27:54 UTC),” he said. “This is the time before database maintenance and is the last known good state.”
“Recovery efforts are ongoing. We can confirm that all user funds are SAFU,” a message on the Paradex website reads.
It is not known how many users were affected by the error, nor the value of the funds liquidated. Paradex shut down access to its block explorer shortly after the massive liquidations.
But the exchange processed nearly $1.6 billion in transactions the previous day, according to data from DefiLlama, while CoinGecko reported $652 million in open interest over the past 24 hours.
A shaken confidence
Rollbacks are typically a last resort for blockchain projects because they undermine the technology’s primary goal: providing a single, consistent, and immutable shared ledger of transactions.
This incident has shaken investor confidence in Paradex, which aims to provide fee-free trading with deep liquidity and privacy.
The platform is incubated by Paradigm, the institutional crypto derivatives liquidity network, and not the venture capital firm of the same name. In 2021, Paradigm raised $35 million at a valuation of $400 million from investors including Jump Capital, Alameda Ventures, Genesis and Nexo.
Paradex is not the first criminal exchange to encounter problems in recent months.
Hyperliquide, the largest exchange by 30-day trading volume, has lost tens of millions of dollars over the past year after its markets were attacked by large traders.
In August, a trader inflated the value of futures contracts for the XPL token by 200%, netting $15 million and inflicting heavy losses on other traders.
It is not yet known when users whose funds are blocked on Paradex will be able to access it again.
“Due to the complexity of the recovery process, we do not have a confirmed arrival time at this time,” Paradex said. “We will provide further updates as they become available.”
Tim Craig is DL News’ DeFi correspondent based in Edinburgh. Contact us with advice at tim@dlnews.com.
