EdgeX will compensate traders hit by forced liquidations after a sharp collapse in its EDGE token and has posted a 200,000 USDC bounty for information leading to those behind the incident, the platform said.
The exchange said it will make “goodwill care payments” to cover actual realized losses on its Perp V1 and V2 products during a narrow window on June 2, when EDGE plunged 71% from above $1.40 to $0.40 before rebounding to around $0.63 the following day. EdgeX stressed that the protocol remained fully operational, that customer funds were not at risk, and that its own team did not sell any token allocations.
Concentrated selling in thin liquidity
According to EdgeX, the crash began in a brief low‑liquidity period on June 2 between 04:50 and 06:00 (UTC+8), when 174 addresses executed concentrated sell orders on PancakeSwap.
A more detailed report from the exchange said that, at a time when on‑chain liquidity stood at roughly $1.25 million, those 174 addresses sold about 159,000 EDGE in a single minute. This represented a tenfold jump in volume versus prior minutes and drove an immediate 23% drop in the token price, which then rippled into perpetual markets and other venues.
Between 5:00 and 6:00 a.m., combined sell volume reached $140.66 million, EdgeX said. The market was heavily skewed to the long side, with a long‑to‑short ratio of 68.2%, leaving leveraged positions vulnerable once prices started to slide.
Data from the following 24 hours show more than $6.2 million in liquidations linked to the move across multiple exchanges, with long positions absorbing $4.84 million of that total. Overall trading volume on centralized exchanges and EdgeX spiked to about $70 million, around ten times normal activity.
Reimbursement terms and delayed full payout
EdgeX said eligible Perp V1 and V2 traders can claim up to 100,000 USDC each in compensation for realized losses during the specified timeframe, excluding fees and unrealized gains.
The platform will split payouts into two parts. Half will be paid in USDC within a week. The other half will be paid in EDGE based on its seven‑day time‑weighted average price, with final distribution scheduled for the first week of April 2027. That structure links full recovery of losses to the longer‑term performance and stability of the token.
Bounty and internal review
Alongside reimbursements, EdgeX announced a 200,000 USDC bounty for information that leads to the identification of those responsible for what it described as a deliberate external attempt to distort the market. The company has repeatedly denied any protocol security breach.
EdgeX said it conducted an internal review and worked with institutional liquidity providers and several major exchanges. Initial assessments from those partners pointed to limited liquidity and aggressive selling, rather than insider activity, as the primary cause of the dislocation.
To reduce the risk of similar episodes, EdgeX said it is expanding partnerships with liquidity providers and market makers to deepen order books across both on‑chain and off‑chain venues.
Disputed narrative and concentration concerns
On‑chain researcher ZachXBT has publicly challenged EdgeX’s explanation. He argues that EDGE supply is heavily concentrated among a small group and that the circulating float is low, making the token structurally prone to violent price swings in thin markets.
ZachXBT has urged EdgeX to disclose details of past arrangements with market makers and other counterparties to clarify who controlled liquidity and how it was managed ahead of the crash. EdgeX, by contrast, has framed the event as a coordinated attempt by outside actors to manipulate the market.
Broader market stress and lessons for thinly traded tokens
The EDGE collapse unfolded against a wider market sell‑off. More than $1.8 billion in liquidations occurred in a single day as Bitcoin dropped below $67,000. The Crypto Fear & Greed Index fell to 11, signaling “extreme fear” and highlighting a fragile backdrop where modest selling can cause outsized price moves when liquidity is thin.
The incident also underscored how quickly stress can jump between markets. Selling in a shallow on‑chain pool fed into perpetual swaps, which then triggered automated liquidations and further selling across decentralized and centralized platforms.
For assets like EDGE, where only 350 million of a 1 billion total token supply are circulating, the episode highlighted the structural risk: concentrated selling into shallow order books can rapidly spiral into severe price dislocations, amplified by leverage and interconnected trading venues.
Worried about liquidation risks after token crashes? Learn how to avoid liquidation and protect your leveraged positions.
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