NEW YORK — A burst of selling on crypto exchanges wiped out nearly $52 million in leveraged chip-stock bets in 10 minutes on Saturday evening, with Wall Street closed and the shares themselves frozen. With no stock market open, there was no real share price for the contracts to follow, CoinDesk reported.
The bets were perpetual futures, contracts that track a stock’s price and trade around the clock on crypto platforms. A trader who leverages a position is closed out automatically when losses eat through the deposit, and the forced selling can push prices lower for the next trader in line. The flush came after a week in which a tech stock rout hit Seoul and Tokyo, with South Korea’s KOSPI down 7.57 percent on Thursday.
About $51.6 million in positions was force-closed between 21:22 and 21:32 UTC, or 5:22 to 5:32 p.m. in New York, according to CoinGlass data cited by CoinDesk, and about $38 million of it came from bets on higher prices. SOXL, a fund that triples the daily moves of chip shares, took the largest hit at about $12.7 million. SanDisk and SK Hynix contracts followed at about $10.8 million each. The total counts positions closed out, not cash lost by any one trader.
What makes it more than a bad ten minutes is who set the price. CoinDesk reported that the selling began on Binance, citing a review of the trades by David Jeong, chief executive of the trading firm Tread.fi. Its sentence ties the first large SanDisk and Micron sell orders, at 21:21:59 UTC, to Jeong in a way that does not make clear whether the orders were his. Less than a second later, orders reached Hyperliquid, where Trade XYZ lists stock-tracking contracts, and roughly 10 addresses opened bets against six chip-linked contracts within 1.8 seconds. In the first minute Binance handled about $21.9 million of SanDisk trading, against $3.1 million on Trade XYZ.
Trade XYZ’s rules, as CoinDesk described them, let trading on the platform set its own reference prices until outside stock quotes return, which happens when U.S. markets open Monday. Memory-chip shares were already coming off a rough week of worry over Chinese rival CXMT, whose Shanghai debut in July had knocked Micron and SK Hynix shares lower. CoinDesk said only that Monday will show how far Saturday’s prices strayed.
It was not the first time this month that a chip selloff reached these contracts. CoinDesk reported on Oct. 13 that crypto exchanges liquidated about $803 million of leveraged positions in 24 hours during the Asian chip rout, and that SanDisk contracts, at roughly $19 million, ranked above XRP’s $18.78 million.
Trade XYZ has also been here before. In late July, Cointelegraph reported, the mark price of its SK Hynix contract fell to $917.25 from $1,127.90. The platform said its oracle “worked as intended according to its specification” and then agreed to cover eligible liquidation losses, calling that a “one-time discretionary decision.” CoinDesk did not say whether Saturday’s traders will be offered anything similar, or what a SanDisk share was really worth at 5:27 p.m.
