Industry experts and data analysts warn that major exchanges like Binance may have significantly undercounted the true scale of liquidations during last week’s crypto meltdown.
Claims of Massive Underreporting Shake Market Confidence
A growing number of analysts are questioning the accuracy of liquidation data reported by centralized exchanges, following what has been described as the largest crypto liquidation event in history.
Hyperliquid CEO Jeff Yan claimed that Binance’s liquidation reporting system may understate real figures by as much as 100 times, due to its method of recording only one liquidation order per second per trading pair.
“Because liquidations happen in bursts, this could easily be 100x under-reporting under some conditions,” Yan explained, citing Binance’s documentation on how its “Liquidation Order Snapshot Stream” processes data.
His warning echoed comments from CoinGlass, a leading crypto analytics platform, which stated that “the actual liquidated amount was likely much higher” than official data suggested.
The $19 Billion Wipeout
The claims surfaced after an unprecedented $19 billion liquidation event swept through the crypto markets last Friday. Triggered by U.S. President Donald Trump’s announcement of sweeping tariffs on China, the flash crash saw Bitcoin plunge to $102,000, Ether fall to $3,500, and Solana drop below $140.
According to CoinGlass, $16.7 billion in long positions and $2.45 billion in shorts were liquidated within 24 hours. However, Yan and other analysts argue that the real figure could be far higher, given Binance’s current reporting structure.
The fallout was severe: over 1,000 Hyperliquid wallets were wiped out, while 6,300 wallets recorded combined losses exceeding $1.23 billion, according to Lookonchain data.
Centralized Platforms Under Scrutiny
Binance faced intense criticism as traders reported frozen order screens, unresponsive stop-losses, and altcoins showing $0 prices during the crash.
Binance’s CEO Yi He responded, claiming that while “some functional modules experienced brief lags,” the core matching engines remained stable. She added that Binance compensated users affected by temporary depegging events—a payout totaling over $280 million.
However, many traders remain skeptical. One user described the experience bluntly: “On Binance, buttons stopped working. Stop orders froze, limit orders hung — only liquidations were executed perfectly.”
DeFi Protocols Pass the Stress Test
While centralized exchanges stumbled, decentralized finance (DeFi) platforms showed greater resilience. The Ethena USD (USDe) stablecoin maintained its peg on Curve, even as it fell below $0.70 on Binance and $0.95 on Bybit.
“Minting and redeeming worked perfectly during the crash,” said Ethena Labs founder Guy Young, revealing that $2 billion worth of USDe was redeemed across DeFi platforms within 24 hours.
Hyperliquid, whose blockchain recorded zero downtime, highlighted the episode as proof of the strength of on-chain systems.
“This was an important stress test proving that Hyperliquid’s decentralized and fully on-chain financial system can be robust and scalable,” the company wrote.
Experts warn that inaccurate liquidation reporting by centralized exchanges could undermine trust and market transparency at a critical time.
“If exchanges are undercounting liquidations, it means traders, regulators, and analysts are flying blind during volatile periods,” said a Singapore-based crypto data researcher.
The controversy underscores a growing divide between centralized and decentralized infrastructures, as the industry grapples with calls for greater transparency, reliability, and auditability in crypto market data.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.