Dear Valued Community Members,
I write to you today from the depth of my heart as the CEO of our project, Position Exchange. I find it necessary to communicate with you following the recent unfortunate events concerning our Futures Staking product, which have undeniably impacted our revered members of the community.
Regrettably, our deposit pool, a significant asset to many of you, has been significantly affected by malicious activities perpetrated by various fraudulent entities. These entities have unethically exploited the trading with BUSD bonuses feature, masterfully manipulating specific loopholes, and consequently extracting substantial amounts from the deposit pool.
I am profoundly aware of the severity of this incident, and I understand the financial losses our deposit pool users have suffered. As the leader of this project, I feel a profound sense of responsibility for the loss and distress this has caused you. I deeply regret this unfortunate turn of events and sincerely apologize.
I write down this letter with a heavy heart, with the intention of providing you with a detailed, sincere, and transparent account of the chain of events that led to this unfortunate situation. Furthermore, I feel it is my responsibility to share with you the remedial actions we have planned and the measures we will be taking to prevent such incidents from recurring.
Earlier this year, in January 2023, we embarked on a new journey with the launch of the next version of DPTP. The response from our user base was nothing short of phenomenal. Your support was astounding, it translated into high trading volumes and propelled us into the top 10 Dapps globally, in terms of 24h user numbers. This remarkable achievement was made possible because of your unwavering faith and trust in us, and for this, we are deeply grateful.
However, our success came with challenges that we were not fully prepared to handle. Along with the genuine traders, the platform was attracted some dishonest entities who manipulated the system for their benefit. The incentive of the BUSD bonuses was exploited by these fraudulent entities through the creation of multiple referral accounts, facilitating “money laundering” activities via our trading system.
Here’s how they managed to manipulate our system:
- They created multiple referral accounts to earn the BUSD Bonus.
- Then, they coordinated high-leverage trades against each other using these accounts.
- Due to the careful planning and execution of these trades, they invariably led to considerable profit for these fraudulent entities.
This unfortunate incident led to the loss of the total amount of BUSD our stakers had deposited into the pool, a failing for which I am deeply remorseful.
Despite our best efforts to monitor such activities, we failed to manage the exponentially increasing user data effectively. This failure to promptly identify and resolve the issue has had severe consequences for which I extend my most heartfelt apologies to all the affected BUSD stakers.
As you know, our Futures Staking system works on a pool-to-trader mechanism. When traders profit, stakers may experience a loss, and vice versa. We did state the potential risks of this system explicitly on our website. However, we acknowledge that we fell short in monitoring the BUSD Bonus feature properly. We did not foresee the possibility of such extensive exploitation, and for this, we accept full responsibility.
To further clarify, I want to assert that all the lost funds were used to pay returns to the traders - none of it was used for our personal purposes. All these transactions can be verified and traced on the blockchain. I have attached all the transactions in the following Excel file for your perusal:
This data is quite hefty, containing 415,186 rows including transactions related to the Insurance Funds contract from February 9 to February 24. We encourage everyone to download and research this data.
However, if it’s too large to handle, you can check out the overview through the following image.
In this image, you can see ‘Deposit’ and ‘Withdraw’ which represent the ‘In’ and ‘Out’ actions of the Insurance Funds.
The total amount received by the Insurance Funds was 5,026,735.45 USD, and the total amount withdrawn was 4,971,688.66 USD. The reason for this discrepancy is due to the large volume of data, meaning our transaction collection system may have encountered some issues and couldn’t collect all withdrawal transactions so some withdrawal transactions might be missed. If you still desire 100% accurate data, we can proceed to recollect all the data and republish it.
The detailed table lists the total money corresponding to each action.
| Type | Signature_text | BUSD Amount |
|---|---|---|
| DEPOSIT | openMarketOrder(address,uint8,uint256,uint16,uint256) | 2,283,351.38 |
| DEPOSIT | openLimitOrder(address,uint8,uint256,uint128,uint16,uint256) | 1,486,693.31 |
| DEPOSIT | stake(uint256,address) | 1,079,300.65 |
| DEPOSIT | addMargin(address,uint256) | 171,386.81 |
| DEPOSIT | execTransaction(address,uint256,bytes,uint8,uint256,uint256,uint256,address,address,bytes) | 6,000 |
| WITHDRAW | crossCallHandler(uint256,address,bytes,bytes) | 4,419,631.99 |
| WITHDRAW | unStake(uint256) | 260,865.1 |
| WITHDRAW | refund(address,address,uint256,bytes32) | 228,728.1 |
| WITHDRAW | harvest() | 59,463.47 |
| WITHDRAW | multiSend(bytes) | 3,000 |
Here’s a brief overview of the operations of the Insurance Funds:
openMarketOrderandopenLimitOrder: These are deposits into the fund and are used to open new positions or orders.stakeandaddMargin: These operations are also deposits and addMargin being a top-up to a position.crossCallHandler: Managed by relayers, this operation is called when closing/reducing/removeMargin from a position, marking a withdrawal from the fund.unStake,refund, andharvest: All these are withdrawal operations from the insurance fund.
As you can see, the total margin deposited by users for trading exceeds 4 million, whereas the staking funds amount to only $1M. Given the average leverage of x10, traders would only need a profit of 2.5% to deplete the pool.
Regardless, we aim to share these data to demonstrate that we’re not drawing from the staking funds and are not shirking our responsibilities. We are fully aware of the importance of the funds that you have entrusted us with. We deeply regret this situation and are committed to bearing the entire loss experienced by our stakers. However, given the considerable costs associated with running and developing the project, an immediate reimbursement is not feasible.
With sincere commitment, we intend to do everything within our hands to generate profits. Once we are successful in achieving this, we will start the process of refunding the pool amounts. We plan to maintain an interest rate of approximately 20% per year on all staked amounts, as a form of savings, for the time being. Rest assured, we guarantee the return of your principal amount, along with the accrued interest.
We are in the process of making arrangements to return the principal amount to those who have requested early withdrawal. In the interim, we kindly ask for your understanding and patience. We pledge that once we start making profits from the project’s developments, we will prioritize returning these profits to you.
Your continued support and understanding in these challenging times are crucial to us. We stand firm in our commitment to developing this project and assure you that we have no intention of abandoning it. We are aware that some projects may see their development teams gradually disband, but our team is here to stay and resolve the issue at hand.
Recently, we noticed that some users have been spreading negative sentiments and misinformation about our project on various social media platforms. While we understand the disappointment and frustration behind such actions, we respectfully request that you refrain from engaging in such activities and continue to support us in our collective pursuit of profitability.
Negative information serves to damage the project’s reputation and can lead to its gradual decline. We need your understanding and support more than ever. We pledge to work relentlessly to resolve the issues that have arisen and to make our platform safer and more reliable for all our users.
Your understanding, support, and trust have been instrumental in getting us this far, and we trust that with your continued support, we will overcome these challenges.
Once again, we deeply regret the inconvenience caused and thank you for your patience and understanding.
With heartfelt sincerity,
Justin
