$60M Crypto Liquidation Fallout: AI Trading Firm Moves to Make Investors Whole

Trade.xyz said it will reimburse users who were liquidated after its SK Hynix perpetual futures contract experienced a sudden 19% decline, with the exchange attributing the move to a single trade executed during South Korea’s pre-market session rather than any failure in its technology.

The decentralized derivatives platform said the contract’s mark price — the value used to calculate trader profits, losses, and liquidation events — dropped from about $1,128 to $917 at 23:01 UTC on July 27. The price movement came from a completed trade reported by multiple independent data sources, which were tracking activity from what Trade.xyz described as the main Korean pre-market venue.

The company said its oracle system performed according to its intended specifications, noting that there was no evidence of a technical malfunction or intentional manipulation behind the price move.

Trade.xyz explained that the oracle accurately captured a legitimate market transaction and delivered that information to the blockchain-based platform. However, because trading volume was limited, a single order was able to move the price sharply lower, causing automatic liquidations for traders with leveraged positions.

The exchange stressed that the reimbursement plan is a discretionary one-time action and does not represent a commitment to cover losses from similar incidents in the future. Trade.xyz said it will share eligibility details and expects affected traders to receive compensation within a few days.

The company is also reviewing its price discovery process following the event. Trade.xyz said it may place greater emphasis on pricing from its own order books, which it believes now provide increasingly meaningful liquidity and market signals compared with external sources.

The incident adds to a wider discussion around crypto derivatives markets, where perpetual futures can sometimes influence spot prices rather than simply follow them. Studies of Bitcoin and Ether markets have shown that derivatives often play a leading role in price discovery, while some pre-launch perpetual contracts have delivered more accurate market pricing than traditional mechanisms.

The SK Hynix perpetual futures crash occurred shortly before a major selloff in South Korean equities. Shares of SK Hynix later fell roughly 17% on Wednesday, even after the company reported a 557% surge in quarterly profit that still came in below market expectations.