A report from Cointelegraph and statements by Hyperliquid’s CEO suggest that centralized exchanges like Binance may be underreporting real liquidation data by up to 100× during periods of high volatility exposing a troubling lack of transparency that could reshape trust in the crypto ecosystem.
Amid growing volatility in the crypto market, new accusations have emerged claiming that major centralized exchanges (CEXs) might be concealing the true scale of liquidations. Jeff Yan, co-founder and CEO of the decentralized platform Hyperliquid, stated that these exchanges (including Binance) may be reporting only a fraction of the actual liquidations taking place during periods of intense trading activity.
According to Yan, the internal reporting system used by exchanges such as Binance only publishes the last liquidation event that occurs within each 1,000-millisecond interval. This means that if dozens or even hundreds of liquidations happen within a single second, only one would be reflected publicly. This technical limitation, often justified as a way to prevent system or API overload, could result in publicly available data representing as little as 1% of the true total.
The revelation follows the recent market “flash crash,” during which over $19 billion in combined liquidations were reported, according to CoinGlass data. However, analysts warn that the real figure could be significantly higher if unreported events are taken into account. Research platforms such as CoinGlass and media outlets like The Block have both noted that the true impact might be heavily underestimated.
Although Binance responded by saying its core systems remained stable during the crash and attributed anomalies to “display issues and temporary delays,” the crypto community was quick to highlight the lack of transparency. The company also acknowledged compensating affected users with nearly $280 million for depegged products, a sign that the episode may have been deeper than officially admitted.
This incident reignites the debate over the reliability of data provided by centralized exchanges and strengthens the case for decentralized infrastructure. On platforms like Hyperliquid, every order and liquidation is recorded directly on-chain, allowing anyone to audit market activity in real time. This feature (central to crypto’s original ethos) is regaining importance as transparency and data integrity come under renewed scrutiny.
The potential impact of this revelation extends far beyond a mere technical dispute. If centralized exchanges are indeed underreporting liquidations, the risk models, trading strategies, and volatility metrics relied upon by thousands of analysts and institutional investors may be based on incomplete or distorted data. This not only undermines the accuracy of financial analysis but also threatens the overall stability of the market, which depends on trust in the information being published.
Ultimately, the controversy highlights a structural tension within the crypto world: while centralized platforms prioritize efficiency and operational control, decentralized systems emphasize radical transparency and public verifiability. If these allegations prove true, the industry could be facing a turning point, one that pushes it to redefine reporting standards, transparency expectations, and accountability frameworks that have sustained its growth.
The community now awaits clearer answers from the sector’s leading players, aware that in an ecosystem built on digital trust, hiding information doesn’t just erode the credibility of exchanges, it undermines the very future of decentralized finance itself.
