An Official Statement from Changelly. Behind the DOGE Incident
Dear Changelly users,
We would like to issue an apology for the situation surrounding DOGE exchanges in the past few days and shed some light on what has been going on behind the scenes.
DOGE bull run
This past week we have been witnessing events we never thought were possible, both in the world of traditional trading and here, on the crypto market. Although we have been in this industry for over five years now, we have never before seen such unity and camaraderie among traders – especially when it came to pushing such an established coin as DOGE to the moon. What’s going on right now is frankly spectacular, however, we have not been properly prepared for this particular scenario.
As we’ve already announced, on January 28-29th we received approx. 15.000 exchange requests via our web and mobile apps as well as our API partners, which include such giants as Exodus, Ledger, and Coinomi. We had the liquidity to process everything, but DOGE’s rapid growth triggered our internal process that aims to minimize the customer’s losses in case of significant market swings.
Loss Limit Protocol slowed down the processing
Here’s how this process works:
If our system detects that the actual amount we are sending to the user is up to 25% off from the one estimated at the moment the transaction was initiated, then that transaction is given the “pending” status and has to be pushed through manually. In order to help our users to not lose their funds, we contact each client whose transaction is pending to ask them whether they want to push it through at the current rate or issue a refund.
In the past, before this system was installed, our users often used to lose money on significant market swings. Unfortunately, crypto exchanges are not instantaneous, and the rates can change dramatically within mere minutes. In response to our users suffering losses and our partners’ requests, we have decided to adopt this process. It has worked out great before – on average 40% of our users decide to ask for a refund, this system helping them to avoid losing their money. This time, however, our support team was overwhelmed with requests and was unable to get back to the clients whose transactions were pending.
Support was overwhelmed
Our support team is responsible for contacting clients and finding out whether the user wants to push their transaction through or refund it. We could not do anything about the pending transaction before we received the customer’s response. However, on those two days we have been swarmed with an unusually high number of messages, which created a roadblock that prevented us from properly executing the process we’ve described above. As a result, processing times were increased.
On a usual day, our support team has around 20-50 chats open at once, but on January 28th, that number reached 500. This was mostly due to the overwhelming number of pending transactions, but also had to do with how chaotic the crypto market was at the time, which created panic. These circumstances made it impossible for us to determine which users were messaging us about their pending transactions and which ones had issues that could wait or were not issues at all. Our only option was to temporarily disable live support and handle all requests via tickets, which can be submitted through [email protected].
DOGE was disabled
As a result, in just a few hours 2253 transactions got stuck, as we couldn’t contact users to ask them whether they wanted their transaction to be pushed through or refunded. We attempted to disable the aforementioned internal process, but it was taking us too long. After some consideration, we decided to disable DOGE and fail all new incoming DOGE transactions. If we hadn’t done that, more user funds would’ve been stuck as the pending transactions would’ve continued to pile up, and the backlog would’ve reached astronomical numbers.
Exchange partners halted withdrawals
As all of this was going on, our partner exchanges such as Binance also closed withdrawals, which increased processing times even further.
We are currently still working on sorting out all the pending transactions.
We assure you that all requests will be handled. Our top priority has always been and will always be the safety of our users’ funds, so we take utmost care in making sure that each of you can get your money back.
Here are some numbers
Out of 3800 tickets, only 150 are left to be processed. Live chats are expected to launch tomorrow.
35% of all transactions were executed better than initial estimates, 50% – with 1-3% deviation from the estimates, 12% – with up to 10% deviation, and finally only 3% of all DOGE transactions were executed with more than 10% deviation
165 DOGE transactions are yet to be processed – and that number is growing smaller by the hour
550 refunds have already been issued, with less than 50 to go
Important note! We cancelled network fees on refunds for all DOGE transactions that have been initiated on January 28-29th.
To conclude, the process described above was designed to protect our customers, but unfortunately did not account for day-long pump and dump strategies. We understand what needs to be changed, and we will improve this system so we are prepared for similar situations in the future.