Company behind AI trade that caused $60 million crypto liquidations to cover all losses
The mark price fell 19% on a single pre-market trade in Korea. The company says its oracle worked exactly as designed.
- Trade.xyz will reimburse traders whose positions were liquidated after its SK Hynix perpetual futures contract suddenly dropped 19% on Monday, a move the exchange attributes to a single trade on a thin Korean pre-market venue.
- The company said its price oracle functioned as designed by relaying a real but outsized trade that sharply moved the mark price, and emphasized that the decision to cover losses is a one-time, discretionary action with eligibility rules to come.
- In response, Trade.xyz plans to reassess how it sources prices, giving more weight to its own order books, as research shows crypto perpetuals can lead spot markets and even price events like SpaceX’s IPO more accurately than traditional bookbuilding.
Decentralized perpetuals exchange Trade.xyz said it will reimburse traders liquidated when its SK Hynix perpetual futures contract crashed 19% late on Monday, a loss the company attributes to a single executed trade on a thin Korean pre-market venue rather than any failure in its systems.
The mark price, the reference figure used to calculate profits, losses and liquidations, fell from about $1,128 to $917 at 23:01 UTC on July 27, according to the company. The print came from an executed trade relayed by multiple independent data providers, and the data point feeding the contract was tracking what Trade.xyz called the primary Korean pre-market venue.
“The oracle system worked as intended according to its specification,” the company said. Nothing malfunctioned and nobody manipulated anything, on the evidence so far
The oracle, a tool that fetchs data from outside points to within a blockchain-based system, faithfully reported a real trade on a market thin enough that one order moved the price nearly a fifth, and the contract liquidated positions accordingly.
Trade.xyz said covering the losses is a one-time discretionary decision rather than a commitment to do so again, with eligibility rules to follow and payouts expected within days.
The remedy it outlined is the more consequential part. The company said it is revisiting its assumptions about external venues and will weigh price formation on its own orderbooks, “which carry increasingly meaningful depth and signal in relation to external sources.”
Research into crypto market structure has found the same pattern in bitcoin and ether, where perpetual futures often lead spot rather than follow it, and pre-IPO perpetuals priced SpaceX’s first trading day more accurately than the bookbuild that set the offering.
The crash printed hours before Korean equities began a record two-day decline, and SK Hynix shares fell about 17% on Wednesday after quarterly profit rose 557% and still missed estimates.
Crypto Flows, Share and the Selective Rotation
Crypto Flows, Share and the Selective Rotation
Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.
Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.
Why it matters:
Markets repositioned since June, but Binance held share (~55% user funds, ~24% spot) and drew net inflows in early July while the tracked market saw outflows.
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