AI Firm Behind $60M Crypto Liquidation Wave to Fully Reimburse Traders

The mark price dropped 19% following a single pre-market trade in South Korea, but the company said its oracle system operated according to its intended design.

Decentralized perpetuals exchange Trade.xyz announced that it will compensate traders who were liquidated after its SK Hynix perpetual futures contract plunged 19% late Monday. The company said the event was caused by a single trade executed on a low-liquidity Korean pre-market platform rather than a technical failure or issue with its infrastructure.

According to Trade.xyz, the mark price — the reference value used to determine trader profits, losses, and liquidation levels — fell from approximately $1,128 to $917 at 23:01 UTC on July 27. The price movement was based on an executed trade reported by several independent data providers, with the underlying data source linked to what the exchange identified as South Korea’s main pre-market trading venue.

“The oracle system operated as designed according to its specifications,” the company stated. Based on the information available, there was no evidence of a system malfunction or deliberate manipulation.

The oracle, which allows blockchain applications to access external market information, accurately reflected a legitimate trade. However, because the underlying market had limited liquidity, a single order was enough to push the price down nearly 20%, triggering liquidations across affected positions.

Trade.xyz emphasized that the reimbursement plan is a one-time discretionary action rather than a permanent guarantee for future incidents. The company said it will release eligibility requirements soon, with compensation expected to be distributed within several days.

The company’s broader response could have longer-term implications. Trade.xyz said it is reassessing how it relies on external price sources and considering greater use of prices generated from its own order books, which it believes are developing deeper liquidity and stronger market signals.

Research into crypto market dynamics has highlighted similar trends in major assets such as Bitcoin and Ether, where perpetual futures markets can sometimes influence spot prices rather than simply follow them. In some cases, pre-launch perpetual markets have also provided more accurate price signals than traditional offering processes, including for companies preparing to go public.

The SK Hynix price crash occurred hours before South Korean equities suffered a historic two-day decline. Shares of SK Hynix later dropped around 17% on Wednesday after the company reported a 557% increase in quarterly profit that still failed to meet investor expectations.