Let's ignore the variable house edge element for now. I believe it's part of the issue here (and I think it's a bad idea in general), but this is a bug that goes far beyond the way that system was intended. My calculation might be off here, but I think losing a x1.02 "roll under" bet with a roll of 20.75 would require a house edge near 80%, nothing like the 0.5 to 3% intended.

ParaDice.io: The bet history that you show doesn't explain what happened to the 0.015 balance that Lone Shark says he had made after his withdrawals - it only shows 5 losses totalling about a tenth of that. With the assumption that Lone Shark is telling the truth about having that balance in the first place, the most reasonable explanation here is that the bug he showed caused him to lose the rest. I think your bet history is coded in such a way that it shows what should have happened (him winning 0.00001 with many bets), but doesn't show what actually happened at the time due to the bug (him losing 0.0005 with each of those bets.) Unless you can either prove that he never had that balance in the first place, or how he actually lost it, your site has ripped him off and you owe him compensation and an apology.