Hyperliquid Founder Criticizes Binance for Underreporting Liquidations

Key Insights:

Jeff Yan, Hyperliquid founder, criticized Binance’s liquidation reporting practices, revealing severe underreporting during high-volatility market conditions.

Hyperliquid’s on-chain liquidation transparency contrasts with centralized exchanges’ (CEXs) opaque methods, offering real-time, verifiable data for users.

Binance announce $283 million compensation for users affected by a de-peg incident.

Jeff Yan, founder of Hyperliquid, has publicly challenged Binance’s liquidation reporting practices, drawing attention to discrepancies in how centralized exchanges (CEXs) report forced liquidations.

In a post on X (formerly Twitter), Yan highlighted what he sees as a major flaw in Binance’s reporting system that underrepresents the actual number of liquidations during periods of high market volatility.

Drawing from Binance's WebSocket Market Streams documentation, Yan pointed out that Binance's Liquidation Order Streams only report one liquidation per second, even when thousands of liquidations happen simultaneously.

This system, Yan argues, means that a massive number of liquidation events go unreported, which could result in a 100x underreporting of liquidations, especially during volatile market conditions.

"Binance reports only one liquidation per second, even if thousands occur simultaneously," Yan explained, referencing how this issue can mask the true scale of market risks.

Industry analysts and data aggregators like CoinGlass have flagged similar discrepancies in Binance's liquidation data, raising concerns that the exchange's reporting system fails to provide a transparent picture of the market.

Full Transparency with On-Chain Liquidations

Unlike Binance,  Yan argues that Hyperliquid offers full on-chain liquidation transparency. Every trade, order, and liquidation on Hyperliquid is recorded directly on the blockchain, making it publicly verifiable.

This transparency ensures that traders can see the real-time status of liquidations and verify the system’s solvency. 

For DeFi enthusiasts and institutional investors, a decentralized approach might offer more reliable data for decision-making, especially during market turbulence.

Unlike CEXs, where data is controlled by the exchange, decentralized finance platforms like Hyperliquid provide a higher level of trust and neutrality, important in markets where transparency is paramount.

Yan’s critique comes at a time when the broader crypto market is facing increased scrutiny, particularly after a sharp sell-off on October 10, 2025, which triggered $19 billion in industry-wide liquidations.

Hyperliquid alone saw $1.23 billion in capital erased, revealing major vulnerabilities in both centralized and decentralized markets.

Binance Faces Backlash After Liquidation Incident

Also, Binance has come under additional scrutiny after a de-peg incident involving tokens like USDe, BNSOL, and WBETH, where many users lost their assets. Critics argue that Binance’s lack of transparency during the liquidations amplified the severity of the downturn, as users were left unaware of the actual scale of liquidations until it was too late.

In response to the outcry, Binance has promised $283 million in compensation for verified user losses, attributing the issue to a pricing flaw in its system. The exchange has also pledged to recalibrate its risk-management tools to prevent such incidents in the future.

However, for many, this is seen as a Band-Aid solution to a much deeper problem regarding liquidation transparency in the centralized exchange ecosystem.