Backpack Inc., a cryptocurrency trading platform, encountered cascading failures following its planned maintenance on July 3. This led to invalid futures orders and problems with balance display. The exchange's CEO, Armani Ferrante, addressed the issues, attributing them to a "programming error" and promising to compensate affected users. Understandably, the incident led to immediate reviews and safety assurances of the fund by the Backpack team.
Backpack had announced that the platform would go offline at 10 a.m. UTC for maintenance, enter a post-only mode at noon, and resume full trading at 12:10 p.m. UTC. Soon after the exchange reopened, users started reporting there were problems with their accounts — positions were flipped and holdings that should have been there were not.
In a message posted to the project’s Discord channel, Armani Ferrante expressed the seriousness of the situation. He referred to the crash as a programming mistake.
"If you had any issues that was our fault, we will compensate." - Armani Ferrante
In a follow-up post, Ferrante reiterated that the incident did not impact the infrastructure the exchange used to custody users’ assets and that all users’ funds were safe. Additionally, he encouraged customers affected by the sudden dissolution to email support@backpack.exchange, promising to personally process their claims. He stressed Backpack’s commitment to refunding individuals for losses incurred due to exchange failures. This encompasses widespread problems such as accidental liquidations and poorly-priced fills.
Many of the user complaints have been quite specific regarding what they were doing when the outage occurred. Hebi, a Chinese user, reported that long positions were flipped to short positions and some holdings disappeared without any trace on the ledger. He further asserted that the audit trail was missing from the account history and that these discrepancies were entered while Backpack was down.
Backpack’s X (formerly Twitter) Chinese profile made a very ambitious announcement to double the points for users who hold active trading positions on July 3. This made it worse still by injecting a new wave of panic to those who were affected in error.
Defi Remora, a Brazilian trader, requested to withdraw $104,000 last night. After maintenance, the request was processed back to his account as 891 Solana (SOL). A second user said their margin debit suddenly increased from 31,000 USDT to 111,000 USDT. To unwind the position manually, they calculated it would cost about $300 to $400 on average.
Backpack deploys an advanced security infrastructure to safeguard your assets. The security employs a two-tier multi-party computation wallet, cold storage custody, and real-time reconciliation of balances for every asset. Nevertheless, the post-maintenance glitch, which apparently caught many government officials by surprise, calls into question the robustness of the exchange’s operational procedures.
Ferrante has promised to take full accountability to investigate the incident to ensure something like this doesn’t happen again.
"do a detailed review and further enhance our process so that it doesn’t happen again" - Armani Ferrante
Backpack’s quick response and promise to reimburse all affected users highlights the exchange’s dedication to fostering customer trust and reliability. We’re glad that the exchange is proactively tackling the glaring problems right away. As important, it is taking steps to ensure that this kind of tragedy never happens again.
