Binance is pushing back against claims that a platform failure destroyed more than 5 million USDT in leveraged trades, insisting that its pricing and liquidation systems worked exactly as designed during a violent squeeze in the AKE perpetual futures market on September 3.
The dispute began when a trader using the handle xunlu published a detailed complaint on X alleging that more than 30 funding-rate arbitrage positions were liquidated within minutes at around 5:44 a.m. UTC+8 on September 3. The trader put the combined losses at over 5 million USDT and claimed the sudden move was the result of coordinated activity in the AKE market rather than ordinary trading.
Binance Customer Support responded within hours, stating that AKE recorded large price swings across several exchanges and on-chain markets during the same window. The exchange attributed the liquidations to market conditions and flatly rejected the claim that a technical problem on its platform caused the losses. According to Binance, an internal review found no fault in its pricing model, risk controls, or liquidation engine, and its systems remained operational while the contract moved sharply against leveraged longs.
The AKEUSDT perpetual contract surged from roughly 0.0076 USDT to nearly 0.045 USDT during the session, a move of several hundred percent that would have erased even conservatively leveraged positions in seconds. For arbitrage desks that treat such moves as background noise, the speed of the liquidation cascade is the core of the complaint.
## Why the mark price matters more than the chart
The technical heart of the dispute is how Binance calculates the mark price for a contract whose underlying token it does not even list on spot. Because AKE trades nowhere on Binance’s own spot order book, the AKEUSDT perpetual cannot draw its reference price from internal liquidity. Instead, the exchange says it builds the contract’s mark price from data gathered across several external spot venues.
A multi-market index of this kind is designed to blunt the impact of an abnormal print or a short-lived price gap on any single exchange. Binance maintained that the index and the mark-price process functioned as intended throughout the September 3 volatility. But the absence of a native spot pair makes the composition and behavior of that external index central to the disagreement, because the trader cannot simply cross-check the liquidation prices against Binance’s own order book.
The distinction between an outage and a liquidation matters here. A liquidation can occur even when an exchange has experienced no failure at all: once the value of a trader’s collateral falls below the maintenance margin required for the position, the platform closes the trade automatically to prevent the account from building a larger deficit. Crypto derivatives trade around the clock, which means automated liquidations can move from a margin warning to forced closure within minutes, leaving traders with almost no time to add collateral during a fast price move.
Perpetual futures, for their part, 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 price close to spot. Exchanges generally determine liquidations from the mark price rather than the last traded contract price, calculating that mark from an index plus a funding-related adjustment to limit forced closures caused by brief distortions in the futures order book.
## Arbitrage is not risk-free
The complainant described the affected trades as funding-rate arbitrage positions, a strategy that seeks to earn the payments created by differences in perpetual-market positioning rather than to profit from a token’s direction. One common version pairs a spot purchase with a short perpetual contract, collecting funding when short holders receive payments from longs. Other structures spread positions across several exchanges or contracts.
Although such trades are often described as market-neutral, they still carry execution, liquidity, collateral, and exchange risks. A fast enough move in the underlying token can overwhelm the hedge before it can be rebalanced, and the side of the trade held on leverage can be liquidated even while the offsetting leg remains intact. That asymmetric outcome is exactly what the trader alleges happened across the 30-plus positions.
Publicly available aggregated spot charts showed heavy volatility during the session, but the highest combined spot reading remained below the contract peak cited by the trader. Observers noted the gap could have resulted from price differences between the futures contract, external spot venues, or the index used to produce the mark price, though no public data has yet established which factor accounts for the difference.
The trader has requested transaction records, liquidation details, and Binance’s risk-control logs so the calculation can be independently examined. Whether the exchange publishes that data remains to be seen, but the episode underlines how much of modern derivatives trading depends on index construction that most retail participants never see.
The liquidation cascade landed on a risk-off day for the wider market. Bitcoin traded at 79,767 USD, down 1.48 percent over 24 hours with a market capitalization of roughly 1.60 trillion USD. Ethereum changed hands at 2,459.75 USD, down 1.38 percent, while Solana slipped 2.63 percent to 101.84 USD, according to CoinGecko data.
30 arbitrage positions liquidated in minutes at 5:44am and binance reviews itself and finds zero fault. cool cool cool
funding arbs getting wiped means the funding flipped violently on AKE, that can happen without an exchange error. xunlu was running a crowded trade on a thin book
crowded or not, 5 million usdt gone and the no-fault response lands within hours. that speed tells you the review was decided before it started
meanwhile binance support replies to this within hours while my ticket from july still sits unanswered lol
the july ticket joke is too real. my AKE ticket got answered with a copy pasted faq link while the 5 million was still evaporating
‘an internal review found no fault’ aka we investigated ourselves and we are innocent. 5M gone from arb traders who were market neutral on every other venue
publish the liquidation engine log for that exact window and the debate ends in five minutes. they never will
they never will bc the log probably shows the cascade working exactly as designed. the real question is who loaded the first domino at 5:44
^ this. regulators can already pull that data on request, so its not secret. volunteering the 5:44 window publicly would end the debate and they still wont do it
been there. exchange says systems operational, you say where did my hedge go, nobody answers. classic
the silence after is the worst part. they park your ticket, then the internal review takes weeks and lands exactly where the press release did. hope you got made whole eventually
the 5:44am timestamp is the detail everyone skips. thin books are thinnest exactly then, whoever ran the cascade knew the clock
5:44am hong kong is 21:44 utc, dead zone for western risk desks too. whoever sized that cascade had the full clock mapped
If the liquidation engine worked fine then the real question is why AKE perp basis blew out that hard on their book specifically. Arb desks do not just eat 5M for fun
AKE is a small cap perp, one squeeze and the liq engine cascades. running leverage there was the mistake, lesson costs 5M
running size on a small cap perp at 5x isnt arb, its directional with extra steps. xunlu knew the book depth when he sized up
kinda agree but 30 positions into one small cap is the part that kills me. spread the book across five perps and this is a bad tuesday, not a 5M obituary
5x on a thin book was the whole mistake, agree. but exchanges also know exactly how concentrated the AKE open interest was. saying systems operational is a non answer
Agreed, 30 positions into one small cap perp is concentration risk wearing an arbitrage costume. Still, the basis blowing out that hard raises fair questions about their liquidity program.
somewhere a risk desk flagged AKE open interest days ago and nobody acted. these squeezes are never a surprise to the venue, only to the traders in them
the detail people miss is xunlu ran the same book on other venues and only the binance AKE leg got annihilated. pure market conditions should have burned every book equally
this is the comment. same book fine on two venues, only the binance AKE leg dies, and the venue reviews itself and finds nothing. look at the liquidity setup, not the trader
Other venues likely ran deeper AKE books or tighter leverage caps. Same book surviving elsewhere says more about per-venue parameters than a Binance-specific fault, though I get why the timing looks bad.
5 million wiped in one squeeze and the official line is no system error. at some point enough arb desks get burned on small caps and the flow just leaves for venues that publish their liq engine logs.
5M across 30 desks is under 170k each, they’ll survive. the scary part is binance reviewing itself faster than it answers support tickets