Crypto exchange OKEx has issued an official statement today, August 3, in response to its forced liquidation of a colossal misfired Bitcoin (BTC) futures trade worth a notional $416 million that was initiated by an unidentified problem trader earlier this week.

OKEx, currently the world’s second largest exchange by traded value, has said that its risk management alert system was immediately triggered when the long position was initiated by an anonymous futures trader at 2 a.m. (Hong Kong Time) July 31.

Due to the “sheer size of the order” — a whopping 4,168,515 contracts, according to OKEx — the exchange says it took preemptive action, explaining that their risk team asked the client to “partially close the positions to reduce the overall market risks” several times,

“However, the client refused to cooperate, which lead to our decision of freezing the client’s account to prevent further positions increasing Shortly after this...unfortunately, the BTC price tumbled, causing the liquidation of the account.”

The exchange has added that it has since then injected 2,500 BTC (around $18.5 million) into an insurance fund to help mitigate the losses incurred by the force-liquidated trade.

Crucially, aside from this insurance cover, the platform does not itself provide the funds that traders use to leverage their futures contracts — OKEx positions can notably be leveraged by as much as 20 times under current rules. Instead, it operates using a so-called “socialized claw-back” policy for cases where a trade shortfall is incurred.

The “claw-back” means that the losses from the unfilled order will need to be covered by counterpart traders. In this instance, those with unrealized gains on their short positions this week are set to lose 18 percent of their profits to foot the bill, as Bloomberg notes.

OKEx’s official statement outlines measures the exchange is undertaking to “prevent similar cases” from occurring again and to enhance risk management and thwart possible manipulation — measures it says are “in line” with the platform’s futures roadmap that was released earlier this month.

As of press time, OKEx has not responded to Cointelegraph’s request for comment.

As reported in July, OKEx is currently collaborating with the Malta Stock Exchange to create a new institutional grade security tokens trading platform. The exchange had relocated to the crypto-friendly island this April.

Bitcoin (BTC) is currently trading at $7,481, down around 1 percent on the day and 8.5 percent on the week.