- Hyperliquid CEO Jeff Yan and CoinGlass warned that centralized exchanges like Binance may significantly underreport actual liquidation volumes during market crashes.
- During a marketwide sell-off, Bitcoin plunged to $102,000, triggering what CoinGlass called the largest liquidation event in crypto history over $19 billion in positions wiped out.
- While centralized exchanges struggled with lag, outages, and display errors, DeFi platforms like Hyperliquid and Ethena remained largely stable and fully operational.
The founder and CEO of Hyperliquid, Jeff Yan, has accused centralized exchanges particularly Binance of undercounting liquidation data, raising questions about the accuracy of reported figures during volatile market conditions.
In an X post on Monday, Yan referenced Binance’s documentation, which explains that its system only reports the last liquidation per one-second interval in its order snapshot stream. While this batching improves system performance, Yan said it also masks the true scale of market wipeouts, especially when hundreds of liquidations occur per second.
The comments followed Friday’s historic crypto sell-off that saw Bitcoin (BTC) tumble to $102,000, Ether (ETH) drop to $3,500, and Solana (SOL) fall below $140. According to CoinGlass, over $16.7 billion in long positions and $2.45 billion in short positions were liquidated the largest single-day liquidation in crypto history.
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CoinGlass corroborated actual amount was likely much higher since Binance only reports one liquidation order per second.
The market carnage also wiped out over 1,000 Hyperliquid wallets, while 6,300 more were left in the red, totaling $1.23 billion in losses, according to Lookonchain data.
Centralized exchanges face scrutiny after flash crash
The flash crash exposed deep structural flaws in centralized crypto trading platforms.
Although Binance CEO Yi He said that “core contract and spot matching engines” remained stable, users reported severe delays, broken stop orders, and altcoin prices briefly dropping to zero.
Some individual functional modules experienced lag and that certain wealth management products depegged, but insisted Binance compensated affected users, totaling over $280 million.
However, multiple traders alleged that Binance’s user interface displayed $0 prices for assets like IOTX/USDT during the crash. Binance later attributed the anomaly to a display bug caused by adjustments to price decimal settings, not actual market data errors.
Crypto influencer Hanzo described the experience bluntly:
On Binance, buttons stopped working. Stop orders froze, limit orders hung only liquidations were executed perfectly.
The incident reignited debates around transparency and dependability in centralized finance (CeFi), especially when compared to decentralized alternatives that withstood the same volatility without disruption.
DeFi platforms show superior resilience during market turmoil
While major centralized exchanges faltered, decentralized finance (DeFi) systems demonstrated remarkable resilience and stability.
The Ethena USD (USDe) stablecoin, for example, maintained its peg on Curve (CURV) despite dropping below $0.70 on Binance and $0.95 on Bybit. Ethena Labs founder Guy Young said the protocol’s minting and redemption mechanisms worked “perfectly,” with $2 billion in USDe redeemed within 24 hours across Curve, Fluid, and Uniswap.
Crash began when $60–$90 billion worth of USDe was dumped onto Binance to exploit mispricing, setting off cascading liquidations.
Meanwhile, Hyperliquid itself highlighted its zero downtime and no latency issues during record trading volumes. In a post, the company called the event “an important stress test” that proved its fully on-chain, decentralized financial system could remain stable under extreme conditions.
A turning point for DeFi transparency and CeFi accountability
The fallout from the flash crash has sharpened focus on a growing divide between centralized and decentralized trading infrastructure.
While centralized exchanges like Binance remain liquidity giants, their opacity in data reporting and operational bottlenecks have eroded trader confidence.
DeFi platforms such as Hyperliquid and Curve, by contrast, showcased transparent, verifiable data and uninterrupted performance, reinforcing their appeal among professional traders and institutions.
As the crypto industry matures, this episode may serve as a watershed moment — pushing regulators, developers, and exchanges alike to prioritize data transparency, security, and reliability across the entire digital asset ecosystem.
