The Bangko Sentral ng Pilipinas, through its supervision and surveillance mechanisms, has been alerted of the reported system glitch involving the Philippine Digital Asset Exchange (PDAX), a cryptocurrency exchange which began retail operations in 2019.
“The BSP is now in close coordination with PDAX as it conducts the necessary investigation to determine the root cause of the incident,” Melchor Plabasan of the Technology Risk and Innovation Supervision Department of the BSP said.
PDAX suffered a system glitch last February 16 causing an outage in the system and resulting in complaints from its users.
Plabasan said that PDAX has been regularly submitting information and has demonstrated cooperation in making certain that the matter will be fully resolved.
Plabasan reiterated that PDAX is regulated by the BSP and not by the Securities and Exchange Commission (SEC).
“PDAX is a BSP-registered Virtual Currency Exchange (VCE), thus, it is governed by existing BSP rules and regulations such as BSP Circular No. 944 on Virtual Currency Exchange, No. 982 on Cybersecurity Risk Management and No. 1019 on Event-Driven Reports and Notification.”
Early last week, PDAX Founder and CEO Nichel Gaba said that PDAX is now fully functional after conducting a systems maintenance check following a surge in cryptocurrency trading week of February 16.
“PDAX has reactivated the users’ capabilities of cashing in and out in a trade, and the buying and selling of cryptocurrencies,” Gaba said.
While a small portion of the user base are still unable to access their accounts, Gaba said that the PDAX team is working round the clock for account restorations but assured that all PDAX accounts have always been safe and secure.
“When we discovered that an unfunded order made it to the system, we took the exchange down to prevent that order from affecting other accounts,” Gaba said.
He acknowledged the concern and anxiety that PDAX users felt during the downtime, but reiterated that the 36-hour system check was necessary to “protect them, the public, and the integrity of the market.”
PDAX has witnessed the steady increase in Filipinos’ interest in cryptocurrencies, amidst the pandemic.
It experienced an increase in transactions up to 70 times its norm during the past 11 months, and saw 15 times growth in users.
Gaba described the surge as an “unprecedented surge which far exceeded our growth expectations.”
“The crypto exchange has been scaling its capabilities to accommodate more users and more volumes of transactions. Still, one isolated and unfunded order found its way into the PDAX system and affected the accounts of other users,” Gaba said.
Gaba said they recorded a total of 2,800 infected user accounts. However, we took the 36-hour outage to protect the public and crypto market.
Gaba also specified that “in many jurisdictions, some cryptocurrency trading platforms are unregulated which means risks are extremely high.
Gaba also revealed that by March 2021, the exchange will “be looking to triple our headcount. We are a small company that has to scale up. We have a very lean team and we’re working on increasing our customer support whom users can immediately turn to during incidents like these. Over the next two months, we will be closely examining our corrections to ensure that every transaction made on the PDAX system is safe, accurate, and compliant.”