Incident Report on AMPL Trading at Bitget

Incident Report on AMPL Trading at Bitget

1. Background

In September 2022, the cryptocurrency exchange Bitget listed AMPL (Ampleforth). However, Bitget completely ignored AMPL’s critical feature, the “rebase system,” when listing the token. The rebase system regularly adjusts the supply of AMPL to stabilize its price. By ignoring this system, Bitget created a situation where arbitrage traders were given profit opportunities while Bitget itself was exposed to significant losses.

2. Incident Occurrence

On August 6, 2024, Bitget suddenly suspended the trading and withdrawal of AMPL. The exchange cited “maintenance for a better trading experience,” but in reality, it froze customer funds. On August 24, 2024, Bitget announced the resumption of rebase, withdrawals, and the delisting of AMPL. The announcement also stated that the rebase would be applied retroactively to users holding AMPL on Bitget, starting from June 16, 2024.

3. Issues

There are four major issues identified in Bitget’s response:

1. Improper Application of Rebase
   For two years, the rebase system was not applied, leading to a failure to respond appropriately to changes in AMPL’s price and supply. This resulted in a situation where arbitrage traders were given profit opportunities, while Bitget itself suffered significant losses.

2. Trading Suspension and Fund Freezing
   The trading and withdrawal suspension on August 6, 2024, was implemented without prior notice to users, effectively freezing their funds. In this situation, users could not manage their risks properly and had no means to withdraw their assets.

3. Problems with Retroactive Rebase Processing
   The rebase applied on August 24, 2024, was retroactively calculated from June 16, 2024, which has been criticized as highly unfair. For instance, a trader who purchased AMPL on August 1, 2024, suffered a 48.6% reduction in their holdings. This reduction rate is significantly different from the fluctuation in AMPL’s total supply between August 1 and August 26, suggesting that the calculation was unfairly applied retroactively. This lack of transparency in the rebase calculation has caused significant harm to users.

4. Lack of Transparency in Rebase Calculation and Future Measures
   The rebase calculation on Bitget lacks transparency, leaving users unable to understand how their assets were adjusted. To ensure fairness, the exchange should recalculate the rebase and refund the difference accordingly. Additionally, to minimize the impact of future rebase actions, Bitget should promptly halt further rebase implementations and convert users' assets to USDT.

4. Conclusion

The incident related to AMPL trading on Bitget was caused by the exchange’s design flaws, delayed response, and improper handling of the rebase process. This incident underscores the importance of understanding and properly managing the unique features of cryptocurrencies by exchanges. It also highlights the need for transparent practices to protect users. It is crucial for Bitget to take further steps to improve the trading environment and ensure fairness and safety for its users.

Summarized by ChatGPT