Dear KAI Users,
At KAI Exchange, we take the safety of user assets and the stability of our trading systems extremely seriously. Recently, during the review of a user inquiry, we identified an isolated incident where certain perpetual contract positions were force-liquidated despite having sufficient maintenance margin. Our technical team promptly initiated a thorough investigation and implemented a system-level correction. Below is a full explanation of the issue and our response:
Incident Overview
On June 5, 2025, a user (UID: 101609) reported that their position was force-liquidated while their maintenance margin ratio was approximately 50%. After reconstructing the position and performing calculations based on account data, our technical and QA teams verified that the maintenance margin ratio at the time of liquidation was closer to 60%, confirming the user’s report was largely accurate.
Further analysis revealed that, under specific conditions involving multiple cross-margin positions, the system’s liquidation logic may produce inaccurate margin ratio calculations due to structural limitations in the original formula.
Issue Identification and Resolution
Our technical team responded immediately with the following actions:
- Refactored the liquidation margin calculation formula and audited all related code references;
- Deployed a hotfix on the same day, with the updated logic now in stable production use.
User Compensation Plan
Upon verification, the direct user loss from this incident was calculated to be 316.95 USDT. Given the importance of platform integrity and user trust, KAI Exchange conducted a full review of potentially affected accounts and has provided the following compensation:
A total of $31,650 USDT was distributed to all verified impacted users. All reimbursements were completed on June 10, 2025.
We believe that user trust is paramount—and we are committed to backing that belief with real actions.
Ongoing Improvements
To prevent similar issues in the future, we have launched the following structural improvements:
- Technical Enhancements
- Introduced dual-review requirements for core code involving liquidation logic;
- Established formal mathematical verification procedures for all margin-related formulas;
- Enhanced system logging, including detailed DEBUG records at critical calculation points.
- Testing Framework
- Expanded testing coverage to include complex cross-margin multi-position scenarios;
- Built an automated test suite targeting liquidation edge cases;
- Implemented monthly specialized regression testing for liquidation logic.
User Asset Safety Is Our Core Commitment
We reaffirm our promise to all users: protecting your assets, responding swiftly to anomalies, and continuously refining our systems are responsibilities we uphold with the highest standards.
If you have any questions regarding this compensation, please feel free to contact us at support@kai.com.Thank you for your understanding and continued trust.
KAI Team
June 12, 2025
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