SynopsisA rogue pre-market trade in SK Hynix shares in Seoul triggered a 20% flash drop in crypto perpetual contracts on Hyperliquid. The oracle price anomaly wiped out nearly $60 million in long positions, resulting in $17.4 million in realised losses for over 900 crypto traders.AgenciesA rogue trade in SK Hynix caused $17.4 million in crypto derivative liquidations on Hyperliquid. Crypto market got a costly reminder this week of the risks that can emerge when traditional financial assets are traded through crypto-based derivatives.The episode began in Seoul on Tuesday, when shares of Korean chipmaker SK Hynix suddenly fell 30% below their previous closing price at the start of trading. The sharp move was triggered by what appears to have been a rogue trade in the pre-market session, where a single share changed hands at an unusually low price. Subsequent trades took place at significantly higher levels, but the initial transaction had already created a problem elsewhere.The reason is that SK Hynix shares are also referenced by a derivative contract traded on the crypto exchange Hyperliquid. The contract allows traders to take leveraged positions on the stock, even though the underlying shares themselves do not trade around the clock like cryptocurrencies.As the SK Hynix price on the contract dropped by roughly 20%, traders holding long positions were caught in a wave of forced liquidations. According to Allium, a blockchain data platform, nearly $60 million worth of long positions were closed within two minutes. The incident resulted in $17.4 million of realised losses among more than 900 users, Allium estimated.The developer of the contract, Trade.xyz, said it would cover liquidation losses linked to the anomalous part of the price move. The company said the system had worked as designed, but acknowledged that users were understandably unhappy about liquidations triggered by the unusual price movement. It also said it would further improve its pricing systems to better handle extreme market events.The incident highlights a broader challenge facing one of crypto's fastest-growing products, known as perpetual futures, or perps. These are derivatives that allow traders to gain leveraged exposure to an asset around the clock. That means a crypto-based derivative can continue trading even when the underlying asset, such as a stock, is not actively trading in its traditional market.The model is becoming increasingly important as traditional financial assets are brought onto blockchain-based trading and payment infrastructure. The goal is to allow assets ranging from stocks to Treasury bonds and commodities to be traded through crypto-style markets.Bloomberg reported that Jordi Alexander, founder of digital-asset fund Selini Capital, compared these traders to people betting around a blackjack table rather than participating in the official casino itself. In other words, traders in the perpetual contract are taking positions on the expected movement of the underlying asset, without necessarily owning or trading the actual shares.Tian Zeng, chief executive officer of crypto hedge fund Third Eye, told Bloomberg that most exchanges typically use multiple pricing sources. If a platform relies on only one source, an unusual transaction could create significant problems. 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.Trade.xyz said the unusually low SK Hynix price was based on an executed trade that was relayed by multiple independent data providers. The company said it was accelerating a review of its price formation process, including its assumptions about external trading venues.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. 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