Michaela
Jeff Yan, founder of the perpetual decentralized exchange (DEX) Hyperliquid, has accused major centralized exchanges (CEX), including Binance, of downplaying the scale of user liquidations during last Friday’s market downturn.
Key points:
- Binance has pledged $283 million in compensation to users impacted by the recent depegging event, but public calls for greater transparency remain strong.
- Questions continue to mount regarding the cause and handling of the weekend incident, prompting scrutiny of the exchange’s internal risk controls.
- Industry leaders stress the need for neutrality and transparency as guiding principles for the next phase of the digital financial system.
“Some CEXs publicly document that they dramatically underreport user liquidations. For example on Binance, even if there are thousands of liquidation orders in the same second, only one is reported,” Yan wrote in an X post on Monday. Yan added that liquidations often occur in rapid bursts, noting that in some cases, centralized exchanges could be “underreporting by as much as 100 times.”
Yan emphasized that Hyperliquid’s fully on-chain liquidation process sets it apart from centralized exchanges, where liquidation data is often opaque. On Hyperliquid, every order, trade, and liquidation is recorded on-chain, allowing anyone to independently verify transaction execution and fairness. He added that the system’s full solvency can also be confirmed in real time. “Transparency and neutrality are key reasons that fully [on-chain] defi is the ideal infrastructure for global finance,” Yan wrote.
Yan also shared a screenshot from Binance’s developer forum indicating that, for each trading pair, only the most recent liquidation order within a 100-millisecond window is included in public data. If no liquidations occur during that interval, no updates are published to the stream.
Furthermore, the Hyperliquid founder expressed hope that the broader crypto industry will begin to view transparency and neutrality as fundamental principles of the emerging financial system, encouraging other platforms to adopt similar standards.
Yan’s remarks came after Binance acknowledged that several tokens briefly displayed $0 prices during Friday’s market crash, though actual balances and orders remained accurate.
The exchange attributed the glitch to a decimal precision update affecting trading pairs like IOTX/USDT. However, traders allege the issue was exploited, as Binance’s system relied on internal pricing rather than external oracles, leading to an estimated $60–90 million in USDe being dumped and triggering as much as $1 billion in forced liquidations across exchanges.
Binance has reportedly allocated $283 million in compensation for users impacted by the recent depegging incident, though calls for greater transparency about the weekend’s events continue to mount.
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Michaela has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
