Mumbai-based Indian crypto exchange WazirX faced a severe lag on its mobile application and website on Tuesday (May 4, 2021), which led to several users complaining about losses worth thousands of rupees.
The incident happened just as the price of Dogecoin, a cryptocurrency made popular because of Elon Musk’s endorsement, began to appreciate in value rapidly. Over the last 24 hours, Dogecoin’s price has increased by around 40%, with one dogecoin trading at INR 53. As the price of the cryptocurrency grew manifold over the night, many investors rushed to sell off their Dogecoins to gain from the price hike. However, WazirX’s server was unable to process these transactions at the time. For many users, the delay in processing resulted in heavy losses.
Several Twitter users complained that while they were trying to sell their Dogecoins when the price of one Dogecoin was around INR 56, their transaction only came through when the price had fallen to INR 51, leading to a loss of money for them. The hashtag ‘WazirXScam’ is trending on Twitter with more uses complaining about a loss of money and urging others to boycott the platform and shift their assets to Binance. Notably, WazirX is owned by Binance, the world’s largest cryptocurrency exchange in terms of trading volume.
WazirX cofounder and CEO Nischal Shetty explained the delay in processing transactions on the platform. On Twitter, Shetty wrote that the platform had seen a 10x spike in concurrent users. “One of our systems incorrectly marked this as a threat. This led to good requests being marked as bad,” he added. The company has since claimed that the temporary issue has been fixed. However, users’ complaints continue to flood Twitter, several of them also complaining about a delay in withdrawal requests.
Last month, WazirX had acknowledged when its platform was down for several hours. Shetty had cited similar reasons for the crash then, namely high trading volumes that the company’s back-end infrastructure could not handle.
“No matter how much you prepare for traffic, some system loads are crazy. Wallet is safe, yes. The load on our systems are way too much. Scaling is taking longer,” he had tweeted then.
It is worth mentioning that the Reserve Bank of India (RBI) has in the past warned against the high volatility of cryptocurrencies and said it could lead to huge losses for investors.