Security firm PeckShield tweeted on Sunday, artibitrum and Avalanche based decentralized cryptocurrency Exchange GMX’s AVAX/USD altcoin He claimed that he was the victim of a price manipulation attack worth about $565,000 in his pair.
$565,000 Lost in Altcoin Trading Pair Manipulation on Decentralized Exchange GMX
Although PeckShield deleted the Tweet, other community members reported similar activity. PeckShield tweeted, “Apparently GMX was manipulated on Avalanche and $565,000 profit was made. Be careful.” he said.
The GMX exchange operates on Arbitrum and Avalanche as a platform offering spot trading and perpetual contracts.
Perpetual trading on the platform allows traders to take advantage of up to 30x margin on futures.
Few known details about the situation show that the AVAX/USD perpetual pair has been manipulated.
In response, the cryptocurrency exchange has capped AVAX long-terms to $2 million and AVAX short-perpetuals to $1 million.
We were notified of price manipulation of AVAX/USD on reference exchanges by monitoring systems and community members.
While we review the occurrence, open-interest for AVAX has been capped at $2m long / $1m short.
GLP and GMX trading markets continue to operate normally.
— GMX 🫐 (@GMX_IO) September 18, 2022
The case is under investigation, according to a tweet from the exchange.
A week before the suspicious attack, a Twitter user named @derpaderpederp stated that GMX may be subject to a price manipulation attack on Ethereum (ETH) transactions as the stock market is not subject to price impact.
The same theory applies to other assets, and in this case AVAX, as this decentralized exchange offers a minimum spread and zero price difference.
The difference between the buy and sell rate of an asset is called the spread.
An attacker can take advantage of this price vector and profit by opening long positions on the DEX and doing the same on a centralized exchange like Binance or FTX. This process can be repeated continuously. However, such actions dry up the platform’s liquidity provider token, GLP.
*Not investment advice.
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