Centralized crypto exchanges underreport liquidation amounts: HyperLiquid CEO

HyperLiquid co-founder and CEO Jeff Yang argued that the way centralized crypto exchanges, especially Binance, report their data is likely to underestimate liquidation amounts.

In a post on Monday

“Because the liquidations occur all at once, they could easily be underreported by a factor of 100, depending on the conditions,” Yang wrote.

Yang’s statement echoed a Saturday X post by crypto data platform CoinGlass. The platform said that “the actual (liquidation) amount was likely much higher” because “Binance only reports one liquidation order per second.”

sauce: coin glass

Related: Crypto liquidations reach $1.8 billion in one day: Final flush or more to come?

$19 billion liquidation event

Bitcoin (BTC) fell to $102,000 on Friday after US President Donald Trump announced sweeping tariffs on China. Similarly, Ether (ETH) fell to $3,500 and Solana (SOL) fell below $140 in a market-wide decline.

According to CoinGlass data, Friday saw $16.7 billion in long-term liquidations and $2.456 billion in short-term liquidations, making it the largest liquidation event in crypto history.

The liquidation order snapshot stream is a data stream that pushes real-time updates about liquidated positions. Batching output in this way improves performance, but Yang explained that reporting only the last liquidation can lead to under-reporting of large liquidation events, as more than 100 liquidations are processed per second per pair.

Yang’s comments come after more than 1,000 HyperLiquid (HYPE) wallets were completely wiped out in Friday’s market crash. According to Lookonchain data, more than 6,300 wallets are in the red, with total losses exceeding $1.23 billion.

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Cryptocurrency total liquidation graph. sauce: coin glass

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The stumbling block of centralized finance

The centralized cryptocurrency trading platform encountered numerous issues during the flash crash. In particular, the world’s top cryptocurrency exchange, Binance, has attracted considerable criticism for several reported issues.

In a post on Sunday X, Binance CEO Yi He said that Binance’s core contract engine and spot matching engine, as well as API trading, remained stable during the event. However, she acknowledged that “we have experienced temporary delays in some individual functional modules of the platform, resulting in de-pegs in certain asset management products.”

Still, she argued that the depegging event did not cause the market crash, and that the peg happened because of or after the economic downturn itself. He also said that “Binance has initiated and completed compensation” to users affected by depegging, amounting to more than $280 million.

Still, it has been widely reported that the prices of some major altcoins reached $0 on Binance at the time of the mass liquidation. Hanzo, a pseudonymous cryptocurrency influencer, shared his experience during the downtime:

“On Binance, buttons stopped working, stop orders were frozen, limit orders hung, and only liquidations were fully executed.”

Binance later stated that the anomaly was not actual market data, but a “display issue” caused by changes in the lowest price decimal point for pairs such as IOTX/USDT.

“Certain trading pairs, such as IOTX/USDT, have recently reduced the number of decimal places allowed for minimum price movements, resulting in the price displayed in the user interface being zero. This is a display issue and not because the actual price is $0.”

DeFi platforms show greater resilience

The Ethena USD (USDE) stablecoin remained pegged on Curve (CURV), a decentralized finance (DeFi) protocol, but was significantly unpegged on Bybit, an exchange that competes with Binance. In a Saturday X post, Haseeb Qureshi, managing partner at crypto venture capital fund Dragonfly, pointed out that USDE hit $0.95 on Bybit and well below $0.70 on Binance, but did not lose its peg on Curve.

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sauce: Haseeb Qureshi

Ethena Labs founder Guy Young said USDe minting and redemption worked “perfectly” during Friday’s flash crash. Data he shared revealed that $2 billion of USDe was redeemed across crypto exchanges, including Curve, Fluid, and Uniswap, within 24 hours.

Tom Cohen, head of investments and trading at quantitative crypto asset management firm Argos, told Cointelegraph: “The beginning can be traced back to Binance dumping around $60 billion to $90 billion of USDe at the same time to exploit mispricing, which triggered a series of massive sell-offs.” He said the decline caused “a thinly traded market to move very quickly.”

HyperLiquid may also face some remorse following the reported suspension of centralized exchanges. “Despite record traffic and volumes during recent market volatility, Hyperliquid blockchain has had zero downtime or latency issues,” the platform wrote in a Saturday X post.

“This was an important stress test proving that Hyperliquid’s decentralized and fully on-chain financial system is robust and scalable,” the post states.

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