On November 10, following a software update glitch, the cryptocurrency exchange Binance repeated an unknown number of user Dogecoin transactions from several years ago. After the funds moved from the exchange’s cold wallet to third-party accounts, the platform demanded that the senders of the original transactions reimburse the losses at the current rate and froze their balances.
As ForkLog learned from one of the victims, a crypto-exchange service provider, in November 2019 and February 2020 he sent clients 30,211 DOGE and 25,400 DOGE respectively. At the time the price was $0.0026. Both transactions were successful.
However on November 10 the cold wallet was debited again for these transactions. Binance blocked the user’s account and demanded the return of funds that had gone to his clients’ accounts — at the current rate of $0.262.
«The first client paid $78 for Dogecoin in 2019 and two years later received about $7,900. The second in 2020 paid $67 for the coins and now received around $7,000. The total equivalent of the claim against me is over $14,900. In other words, the exchange was wrong, sent previously successful transactions to third parties a second time, and now demands these funds from me», – the victim said.
There are currently $12,700 on his blocked account.
«I am ready to cooperate with the exchange and provide, upon their official request, the necessary recipient data for those who were sent funds by mistake, but I am not prepared to bear financial losses from their errors», the client added.
Another victim, trader Dmitry, found himself in a similar situation. Binance again sent 27,705 DOGE to the address that had received them back in November 2020, when the price was only $0.004.
«In tech support they explained that after the latest update they were experiencing some glitches and old transactions were repeated. I asked what relation I have to this glitch and why I should pay for it. I was told that since I once made a payment to this address, this address either belongs to me or I should know who owns it», Dmitry said.
The user said that previously he regularly withdrew Dogecoin through exchanges and cashed them out, so it is impossible to determine whose wallet the coins went to or which exchange it belonged to. Binance refused to unfreeze the user’s deposit until he finds the owner of the recipient address.
«This is an outright scam. Because I once interacted with this address a year ago, I have to locate and convince the person that Binance was mistaken, and they must return the money. Imagine the level of stupidity and absurdity», the victim adds.
On his blocked account there are $2,400. The ‘debt’ to Binance stands at 27,705 DOGE — at the current rate this is more than $7,230.
Another trader, identified by the handle alexmen89, faced claims for 6,680 DOGE due to a transaction in August 2019. Two years ago the coins were worth just over $16; today they are about $1,730.
Victims formed a Telegram chat. Similar problems are being reported by users on English-language forums. The sums blocked on some balances exceed $10,000.
The Binance director for Eastern Europe, Gleb Kostarev, said that the incident affected 1,600 users worldwide.
Representatives of Binance said that withdrawals from the Dogecoin network were temporarily suspended:
«We identified a minor issue with withdrawals from the Dogecoin network after its update to version 1.14.5 on November 10 and temporarily suspended withdrawals».
The Dogecoin team joined the effort to resolve the issue.
«Withdrawals from the Dogecoin network will be closed until the error is fixed. Users can still withdraw DOGE on the Binance Smart Chain and Binance Chain networks», the Binance statement added.
Dogecoin developers explained on Twitter that more than a year ago Binance had already notified them of stuck transactions, apparently due to insufficient fees. They instructed the exchange on how to use the inputs of stuck transactions to cancel them and replace them with others. However Binance did not say whether it followed the provided instructions.
«Recently Binance updated directly from version 1.14.3 to version 1.14.5, which implies lower fees. Therefore previously stuck transactions could have been executed automatically», the Dogecoin team said.
They added that invalid transactions have no fixed waiting time, and are usually removed due to memory constraints. However they may remain if the mempool is not cleared. According to them, to successfully cancel a transaction you must spend the inputs of the cancellable transaction on another one that would invalidate the first.
The developers recommended providers concerned about stuck invalid transactions to stop nodes, delete the mempool.dat file, and then start the node with zapwallettxes.
Revision note: Recall, in late October on the Binance.US price of bitcoin in a minute fell by 87% – from $65,300 to $8,200. The drop was linked to a software bug in one institutional client — its trading algorithm faulted.
The incident drew a flurry of criticism toward the company, as some users’ buy orders at low prices were filled while others sold assets via stop-loss orders.
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