Rogue SK Hynix trade wipes $17.4m in crypto derivatives
A single faulty pre-market trade in Seoul triggered a cascade of liquidations on a crypto exchange, exposing the structural fragility of 24/7 perpetual futures tied to traditional equities.
A rogue pre-market trade in SK Hynix shares on Tuesday triggered a cascading $17.4 million liquidation event on the crypto exchange Hyperliquid. In Seoul, a single share of the Korean chipmaker changed hands at an unusually low price before the official open, briefly dragging the stock 30% below its previous close. Subsequent trades in the traditional market occurred at significantly higher levels, but the initial pricing glitch had already metastasised.
The Hyperliquid contract, developed by Trade.xyz, enables traders to take leveraged positions on SK Hynix shares outside of standard equity market hours. As the derivative's price tracked the anomalous dip and dropped roughly 20%, the platform's algorithms triggered a wave of forced liquidations on long positions. According to blockchain data firm Allium, nearly $60 million worth of positions were liquidated within two minutes, resulting in $17.4 million of realised losses among more than 900 users.
Trade.xyz stated that its system functioned as designed but acknowledged that users were understandably unhappy. The developer will cover liquidation losses linked to the anomalous price movement and noted that the unusually low price was based on an executed trade relayed by multiple independent data providers. The firm is now accelerating a review of its price formation process, including its assumptions about external trading venues.
The episode highlights a critical structural flaw in one of the crypto sector's fastest-growing product categories: perpetual futures. These derivatives allow traders to maintain leveraged exposure to an asset on a 24/7 basis. This continuous trading creates a dangerous mismatch when the underlying asset is a traditional equity that only trades during set hours or experiences illiquidity in pre-market sessions.
"Most exchanges typically use multiple pricing sources. If a platform relies on only one source, an unusual transaction could create significant problems," said Tian Zeng, chief executive of crypto hedge fund Third Eye. "Even when multiple sources are used, however, a problem with one of them could still trigger some liquidations, particularly when traders are using high leverage."
