We have received Binance’s written response to our detailed information request concerning the liquidation on 23 August 2026, together with supporting account data. Binance has also proposed a goodwill payment to help offset the losses. Discussions are continuing, and Binance has requested additional time for a further comprehensive review of the outstanding questions.
This update continues the work set out in our post-mortem published on 4 September. The commitments made there remain unchanged: reconcile the exchange’s records, pursue recovery for affected participants, implement the programme of stronger risk controls, and report on progress. We remain committed to carrying that programme through and documenting its implementation.
Binance has confirmed that the Liquidation Snapshot was generated from its official account records and shows the account immediately before liquidation at 21:11 UTC on 23 August. It confirmed that liquidation was triggered when the account’s unified maintenance margin ratio, or uniMMR, fell below the applicable 105% threshold. Binance maintains that its actions followed the Portfolio Margin Pro terms and clearing rules. Our review of the applicable rules, their implementation and the resulting financial calculations remains ongoing.
In our post-mortem, we acknowledged the gap in EarnPark’s collateral valuation model and took responsibility for that error. That acknowledgment stands. We also stated that our review of Binance’s calculations and execution remained open; the response now received is a further step in that review.
The response also addresses a question EarnPark raised with Binance on 18 August, before the liquidation. We had specifically asked about the treatment of borrowed USDT used to purchase spot assets whose price exposure was hedged through futures positions.
Binance has now confirmed that the USDT liability was recognised in full, while the purchased assets counted as collateral at a reduced value under the applicable collateral ratios. The corresponding futures hedge did not remove that reduction. This mechanism can create margin pressure even where market-price exposure is hedged.
Binance also confirmed that our question was not referred to its Margin or Portfolio Margin Risk team. The handling of that enquiry is a material part of our continuing discussions. We are also seeking a fuller explanation of how these margin mechanics were considered when Binance reviewed the increase in our USDT borrowing limit.
Further work is needed to complete the financial reconciliation. We are reviewing the valuation of collateral, liquidation execution, fees and remaining liabilities. Binance declined to disclose details of the subsequent management and realisation of the collateral removed from the account, describing these as internal operational matters. We continue to seek the information and formal documentation needed to explain the account’s final financial outcome to affected participants.
Alongside this work, we are discussing the terms and payment arrangements for Binance’s proposed goodwill contribution towards the losses. The proposal does not constitute an admission of liability by Binance, and we do not present it as one. It remains under discussion, and receipt of the funds has not yet been confirmed.
We will adhere to the distribution approach set out in section 5 of our post-mortem: any funds received from Binance through this process will be distributed among participants in Maker Core, BTC LP, ETH LP and ETH DeFi in proportion to their positions on 23 August, whether or not they remain on the platform. The allocation methodology and payment timing will be communicated once the arrangements are finalised.
Implementation of the control improvements described in our post-mortem is continuing. Measures already in operation include:
- Correction of the collateral valuation model to incorporate the exchange’s collateral ratios, initially implemented on 25 August, with rollout across all accounts completed on 11 September.
- Daily reconciliation of EarnPark’s margin calculations with Binance’s calculations, to identify discrepancies in the assessment of available margin.
- A standing rule requiring position-size reduction when uniMMR falls below the threshold set for the relevant strategy and asset. Automated de-risking is now operational for USDT DeFi and USDC DeFi. For the remaining strategies, the rule operates in an interim mode, with reductions carried out by the investment team pending automation.
- A risk-monitoring module connected to each of our trading systems, monitoring uniMMR, leverage and operational errors, operational since 11 September.
- Automatic telephone alerts to four designated team members when configured risk thresholds are reached or errors are detected, supporting prompt review and response, operational since 16 September.
These measures are in operation. Further improvements remain in progress, and we will distinguish completed changes from work still underway. We continue to implement the published programme and will report on further completed measures in subsequent updates.
We recognise the financial impact this has had on affected participants and the importance of clear, substantiated answers. We will continue to explain what the records establish, identify what remains unresolved, and report confirmed developments in our discussions with Binance. Our commitment to proportional recovery and transparent reporting remains unchanged.