Paradex's 'free bitcoin' pricing glitch triggers mass liquidations, forces rollback

A "free bitcoin" moment on Starknet-based decentralized exchange Paradex has resulted in a planned blockchain rollback after a technical error briefly priced BTC at $0, triggering widespread liquidations before prices snapped back.

Social media users reported seeing bitcoin trade at zero for a short period, only for the price to recover moments later — by which time thousands of positions had already been liquidated. "Okay, when I posted the screenshot, I thought it was a UI bug," one user wrote on X as the incident unfolded. "Then I saw on the computer that the price came back after going to $0. Now there are thousands of liquidations. This doesn’t look good for Paradex."

Paradex later confirmed it had identified the issue in a Discord announcement and said it would roll back the chain state to a block recorded just before scheduled maintenance began. Clement Ho, Paradex’s director of engineering, reportedly said in a message to users that the rollback would restore the exchange to its last known correct state. The project added that recovery efforts were ongoing and that all user funds were safe.

The DEX did not disclose how many traders were affected or the value of positions liquidated during the glitch. Access to parts of the platform was also restricted as engineers worked through the recovery process, and the team warned users to be cautious of impersonators and fake support accounts during the outage.

Paradex is a decentralized perpetuals exchange built as an appchain on Starknet, designed to offer non-custodial, low-latency derivatives trading. The platform is incubated by Paradigm, the institutional crypto liquidity network not to be confused with the venture capital firm of the same name, and raised $35 million in funding in 2021 at a reported $400 million valuation, with backing from investors including Jump Capital, Alameda Ventures, Genesis, and Nexo, The Block previously reported.

Rollback debacle

Rewriting blockchain history is widely seen as an extreme step because it runs counter to the expectation that transactions, once confirmed, are final.

Most networks instead pause activity or deploy targeted fixes to stop damage from spreading, rather than unwind completed trades. Choosing a rollback signals that normal safeguards were insufficient — and inevitably raises questions about where technical control ultimately sits.

Similar debates have surfaced in recent months as networks grapple with emergency responses.

Berachain temporarily halted its network last year to carry out an emergency hard fork following a $128 million Balancer exploit, stopping further losses without reversing transactions. By contrast, Flow drew criticism after proposing a rollback to undo a $3.9 million exploit, a move that apparently blindsided some partners and unsettled parts of its ecosystem.