Binance denies system error in alleged $5M AKE loss

Binance has denied that a system or pricing failure caused more than $5 million in alleged trader losses as the AKEUSDT perpetual contract surged from about $0.0076 to nearly $0.045 on Sept. 3.

Binance says AKE liquidations followed market volatility

X user xunlu alleged that more than 30 funding-rate arbitrage positions on Binance were liquidated within minutes at around 5:44 a.m. UTC+8 on Sept. 3.

The trader estimated the losses at more than 5 million USDT and alleged that the sudden move resulted from coordinated activity in the AKE market rather than ordinary trading.

Responding to the complaint, Binance Customer Support said AKE recorded large price swings across several exchanges and on-chain markets during the same period. The exchange attributed the liquidations to market conditions and rejected the claim that a technical problem on its platform caused the losses.

Binance also said an internal review found no fault in its pricing model, risk controls or liquidation engine. According to the exchange, its systems remained operational while the contract moved sharply, leaving leveraged positions exposed to an adverse price change.

The distinction matters because a liquidation can occur even when an exchange has not experienced an outage. Once the value of a trader’s collateral falls below the maintenance margin required for a position, the platform can close the trade automatically to prevent the account from building a larger deficit.

An August guide to margin calls published by crypto.news explained that automated crypto liquidations can move from a warning to forced closure within minutes. Unlike traditional markets, crypto derivatives trade around the clock, leaving traders with little time to add collateral during a fast price move.

AKEUSDT mark price relies on external spot markets

Binance does not offer AKE through its spot market, meaning the AKEUSDT perpetual contract cannot use an AKE price formed on Binance’s own spot order book. The exchange said it instead calculates the contract’s mark price from data gathered across several external spot venues.

A multi-market index is designed to reduce the effect of an abnormal print or short-lived price gap on a single exchange. Binance maintained that the index and mark-price process functioned as intended during the Sept. 3 volatility.

Perpetual futures do not represent ownership of the underlying token. Traders post collateral and take long or short exposure to a contract whose value tracks the asset, while recurring funding payments help keep the contract close to spot prices.

As a perpetual futures explainer noted in June, the mark price, rather than the last traded contract price, commonly determines when a leveraged position is liquidated. Exchanges generally calculate that mark from an index and a funding-related adjustment to limit liquidations caused by brief movements in the futures order book.

For AKEUSDT, the absence of a Binance spot pair makes the composition and behavior of the external index central to the disagreement. The trader has asked Binance to disclose the relevant trading records, liquidation data, and risk-control logs so the calculation can be examined.

Publicly available aggregated spot charts showed heavy volatility during the session. However, the highest combined spot reading was below the contract peak cited by the trader. The report said the gap could have resulted from price differences between the futures contract, external spot venues, or the index used to produce the mark price, but it did not establish which factor accounted for the difference.

Trader alleges AKE short squeeze hit arbitrage positions

The complainant described the affected trades as funding-rate arbitrage positions, a strategy that usually seeks to earn payments created by differences in perpetual-market positioning rather than profit from a token’s direction.

Funding-rate arbitrage commonly combines offsetting positions to reduce directional exposure. One version pairs a spot purchase with a short perpetual contract, allowing the trader to collect funding when short holders receive payments from longs. Other structures may spread positions across several exchanges or contracts.

Although such trades are often called market-neutral, they still carry execution, liquidity, collateral and exchange risks. A cash-and-carry guide published in August noted that an arbitrage position can face a margin call when its leveraged leg moves sharply, even if the combined trade is intended to limit exposure to price direction.

AKE’s reported rise from about $0.0076 to nearly $0.045 would amount to an increase of roughly 492%, or almost six times the starting price. A move of that size can rapidly reduce the margin supporting short futures positions, particularly when liquidity is thin and several trades share the same exposure.

The trader characterized the episode as a short squeeze, in which rising prices force short sellers to close their positions by buying back contracts. Such forced purchases can add to upward pressure and trigger further liquidations when nearby short positions breach their maintenance requirements.

During an unrelated market event in August, a $3 billion squeeze liquidated about $2.77 billion in short positions across major exchanges. Binance accounted for approximately $518 million of the total, while forced purchases pushed prices higher and activated more liquidations. The figures show how automated closures can accelerate an existing move, though they do not establish whether manipulation occurred in AKE.

Binance has attributed the Sept. 3 liquidations to the risks attached to leveraged trading and has not accepted the trader’s claim of coordinated market manipulation. No market regulator or independent investigator has publicly reached a finding on the allegation.

U.S. traders face a different perpetual futures market

For U.S. readers, the AKE dispute concerns an offshore Binance product that is not offered through Binance.US. American access to crypto derivatives remains subject to Commodity Futures Trading Commission rules, while offshore perpetual contracts have historically offered assets and leverage levels unavailable on regulated U.S. platforms.

Regulated perpetual futures began entering the U.S. market in 2026. The CFTC approved a Bitcoin perpetual contract from Kalshi in May, followed by contracts tied to other digital assets, while Coinbase secured another regulated path for domestic perpetual products.

U.S. platforms operate under different product approvals, leverage limits, and market-surveillance requirements. CME Group has challenged the CFTC’s treatment of perpetual futures, arguing that the products should fall under swap rules in the Dodd-Frank Act rather than be regulated as standard futures contracts.

In his complaint, the AKE trader also referred to an earlier TUT liquidation incident and said competing exchanges compensated some affected users. Binance has not agreed that the two events are comparable, maintaining that the AKE positions were closed because of market risk rather than an exchange pricing mistake.

Binance had acknowledged the complaint but had not announced compensation. The trader has requested the full transaction history, liquidation records, and risk-control logs related to the Sept. 3 session.