Explanation on the Removal of the ARPA / USDT Leveraged Trading Pair (not spot) from MXC Exchange on February 19
At 3:00 am UTC today, some members of the ARPA community reported receiving an email from the MXC exchange, announcing the removal of the ARPA / USDT 5x leveraged trading pair within two hours.
Announcement on Scrutinizing Margin Trading Liquidity and Delisting of APRA/USDT Margin Trading…
MXC always stay committed to boost the liquidity for margin trading to improve user’s trading experience. As such, MXC…
Before the announcement, MXC did not communicate with the ARPA team nor did it give the ARPA community buffer time. The ARPA team learned about this situation after seeing screenshots from community fans.
In response to this, ARPA price took a quick dive and fell as much as 30% on MXC and consequently on other exchanges. The ARPA team attached great importance to this and immediately contacted MXC to understand the situation and discuss countermeasures.
Here’s what happened after a preliminary analysis:
Around 130mil ARPA was transferred from Binance addresses to MXC by an unknown third party, and it used the ARPA/USDT 5x leverage trading pair on MXC to make malicious profits.
According to the data provided by the MXC Exchange, within 48 hours from February 18 to 19, hundreds of transfers were made through unknown address 0xbb6f0fcd254c7b059525704a4157a573f2e10800, and about 130 million ARPA tokens were transferred to dozens of accounts on MXC. According to MXC, the login IP addresses of these accounts are in Germany, Ukraine and other places.
According to Etherscan, these ARPA tokens were transferred from Binance. According to the preliminary analysis, this individual or group of individuals used the leveraged account to buy ARPA on the market with 5X leverage, while using the spot account to sell ARPA and get USDT. USDTs were then withdrew from MXC immediately, through a series of accounts that had not gone through KYC.
We think there were three main reasons for the flash crash:
First of all, some community members mistakenly interpreted the 5X leveraged trading pair as the ARPA spot trading pair, causing concern about the project itself;
Secondly, the buffer time between the announcement time and the delisting of leveraged trading pairs was only 2 hours, and MXC did not communicate with the ARPA team before the announcement. Large info gap and short response time caused trader to close our their long positions on ARPA in a hurry.
Thirdly, the ARPA spot trading price was about 0.018 USDT at 3:00 on the 19th, while the liquidation price imposed by MXC was 0.014 USDT. That was a 22% difference. The above reasons caused panic sell-off, making the price decline further.
MXC took reasonable measures in response to this malicious act to prevent further damage or loss.
ARPA has good fundamentals, the team is stable and we are developing rapidly. We are currently listed on some of the largest exchanges such as Binance, Huobi Global, Gate., KuCoin. The ARPA team will continue to promote the development of privacy-preserving computation with open-source, community-first way. Thank you for your support!
February 19, 2020