Company behind AI trade that caused $60 million crypto liquidations to cover all losses
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Trade.xyz, a decentralized perpetual futures exchange, announced it will reimburse traders who were liquidated due to a sudden 19% drop in its SK Hynix perpetual futures contract on July 27, 2026. The sharp price decline, which led to approximately $60 million in liquidations, was the result of a single executed trade on a thinly traded Korean pre-market venue. According to Trade.xyz, this trade was real and properly relayed by their price oracle, which functioned as intended by accurately reflecting the outsized market move in the contract’s mark price.
The mark price dropped from about $1,128 to $917 at 23:01 UTC, triggering liquidations based on this reference price used to calculate profits and losses. The company emphasized that there was no malfunction in their systems and no evidence of manipulation. The incident highlighted how vulnerability to thin market liquidity on the external venue can strongly impact contract prices on decentralized exchanges relying on such data feeds.
Trade.xyz decided to cover all losses from the liquidations as a one-time discretionary measure, with specific eligibility rules to be determined and reimbursements expected within days. Beyond the immediate remedy, the company said it will review its price sourcing methodology, intending to give more weight to prices formed on its own order books. This shift is motivated by research indicating that crypto perpetual futures often lead spot markets and may more accurately price events than traditional methods relying heavily on external venues.
The price drop occurred shortly before Korean equities experienced a notable two-day decline, with SK Hynix shares falling about 17% after a quarterly profit report that, while up 557%, still missed estimates. Trade.xyz's response and planned reassessment matter as they demonstrate a cautious approach to improving price feed resilience and protecting traders from extreme volatility caused by thin liquidity in external reference markets.