Wrongful Liquidation on Bitget: A Simple Explanation of What Happened and Why It Matters
- Tubrazy Shahid
- 2 days ago
- 3 min read
This article explains a real case involving a trader whose futures position was liquidated incorrectly on Bitget exchange. The incident shows how technical errors, unclear explanations, and lack of transparency can cause major financial losses for users.
The aim is to present the issue in simple language so anyone can understand what went wrong, why it is serious, and what actions are being requested from the exchange.
What Happened?
On 11 October 2025, a trader’s VET/USDT Perpetual Futures position on Bitget was liquidated. This means the system closed the trade automatically because it believed the trader didn’t have enough margin to keep the position open.
However, the client’s trading data, charts, and liquidation prices do not match Bitget’s explanation.
Because of this, the trader suffered a loss of USD 84,976.58, and the case was escalated legally.
1. Why the Liquidation Looks Incorrect
According to the trader’s chart:
Bitget liquidated the position at 0.010425 USDT
But the true liquidation price, after auto-margin adjustment, should have been around 0.00935 USDT
The market never traded that low
The lowest price during the liquidation period was 0.010354 USDT, which is higher than Bitget’s liquidation price
This means:
The liquidation did not reflect the real market
No wick, tick, or trade reached the liquidation level
The mark-price and index-price logic did not justify the liquidation
In simple terms, the system closed the trade at a price that didn’t exist.
This points to a system error or malfunction.
2. Bitget Gave Three Different Explanations
Between 11 October and 02 November, Bitget presented three different reasons for the liquidation—each one contradicting the other.
First Explanation – Mark Price Liquidation
Bitget said the client's margin fell below the maintenance margin. But for this to happen, a visible market price must trigger the liquidation. This never happened.
Second Explanation – Insurance Fund Absorption
Later, Bitget claimed the position was liquidated internally using the Insurance Fund. But this directly conflicts with the mark-price explanation.
Third Explanation – Auto Deleveraging (ADL)
Finally, Bitget said ADL occurred. But ADL only happens when the Insurance Fund is insufficient, which Bitget never proved.
These three explanations cannot happen together. This raises concerns about:
Internal system errors
Lack of proper investigation
Mismanagement
Failure to explain what truly happened
3. Possible Violations of Bitget’s Own Rules and Seychelles Regulations
The issues described may violate key rules and obligations, such as:
Bitget’s Terms of Use
Fair execution of trades
Transparent and consistent liquidation model
Correcting system mistakes
Providing necessary data when a user files a complaint
Seychelles Securities Act & FSA Requirements
Bitget is licensed in Seychelles and must follow strict rules, including:
Non-manipulative and transparent price execution
Proper disclosure of information
Clear audit trail for liquidations and internal fund movements
Providing data to verify trades and liquidations
However, Bitget refused to provide:
Tick-by-tick price data
Liquidation engine logs
Insurance Fund transaction records
This lack of transparency goes against what regulators require from exchanges.
4. What the Client is Asking for (Within 7 Days)
The lawyer representing the client has requested:
Full liquidation logs Including mark price, index price, maintenance margin, bankruptcy price, and margin-call changes.
Insurance Fund records To confirm whether the position was internally absorbed.
Tick-by-tick trading data To verify the real lowest market price at the time.
Compensation / Reversal Based on the incorrect liquidation, the requested compensation is USD 54,976.58 USDT.
5. What Happens If Bitget Does Not Respond
If Bitget fails to provide the required information within 7 days, the case will be escalated to:
Financial Services Authority (FSA Seychelles)
Seychelles Financial Ombudsperson
Interpol (Digital Assets Unit)
Blockchain forensic investigators
Cross-border legal counsel
These authorities are responsible for investigating unfair trading practices and system errors in licensed crypto exchanges.
Final Thoughts
This case highlights a major concern for traders: An exchange must follow transparent and reliable liquidation procedures.
When:
Prices don’t match the chart
Explanations keep changing
Data is withheld
…it becomes a serious issue that may involve regulatory violations.
Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal or financial advice.
Author & Crypto Consultant
Shahid Jamal Tubrazy (Crypto & Fintech Law Consultant)
Shahid Jamal Tubrazy, a certified top expert in Crypto Law from Duke University, is a leading authority in the cryptocurrency and blockchain space. As a seasoned Fintech lawyer, he offers a full spectrum of services, including licensing, legal guidance for ICOs, STOs, DeFi, and DAOs, as well as specialized expertise in crypto mediation, negotiation, and mergers and acquisitions. With a proven track record and published works on Blockchain Regulation and Cryptocurrency Laws, Shahid provides unparalleled insights into the complexities of the fintech world, ensuring compliance and strategic success. 🌐💼 #CryptoLaw #Fintech #Blockchain #LicenseServices #CryptoMediator #MergersAndAcquisitions #CryptoCompliance #FrozenAssetsrecovery.
EMAIL: shahidtubrazy@gmail.com
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