Hyperliquid’s founder has reignited the debate over exchange transparency, questioning Binance’s liquidation reporting practices.
Summary
- Hyperliquid founder criticizes Binance for underreporting liquidation events, showing only one per second during volatile periods.
- The criticism comes after a $19 billion wipeout led to the depeg of the exchange’s USDe, wBETH, and BnSOL.
- Binance recently pledged up to $283 million in compensation for affected users.
Jeff Yan, the CEO and founder of Hyperliquid, has taken aim at Binance’s liquidation reporting practices, raising concerns about a lack of transparency in how centralized exchanges disclose critical trading data.
In a tweet on Oct. 13, Yan mentioned how Binance’s liquidation streams underreport actual events, particularly during periods of high volatility.
The critique stems from the exchange’s own documentation, which reveals that liquidation order streams only push the most recent liquidation order within a 1000-millisecond window. If no liquidation happens in that interval, no data is sent.
The Hyperliquid co-founder warned that this could result in severe underreporting, potentially by a factor of 100 when multiple liquidations occur simultaneously.
Yan emphasized that such practices contrast sharply with Hyperliquid’s model. Built as a fully on-chain decentralized exchange (DEX), Hyperliquid logs every trade, order, and liquidation on-chain in real-time. This setup, he argues, ensures transparency, neutrality, and user trust.
“Anyone can permissionlessly verify the chain’s execution,” he said, suggesting this is the ideal framework for a global financial infrastructure.
Binance, Hyperliquid hit as volatile weekend causes huge crypto liquidation
The timing of Yan’s statement comes after the crypto market experienced a huge liquidation over the weekend. On Oct. 10-11, a sharp sell-off triggered by renewed U.S.-China trade tensions sent Bitcoin plummeting below $110,000. Over $19 billion in long and short positions were liquidated, with Hyperliquid alone seeing over $1.23 billion wiped out.
The downturn exposed vulnerabilities across exchanges, especially CEXs. Binance, already under pressure, faced additional criticism over a depeg event that sent assets like USDe, wBETH, and BnSOL dropping to $0.65, $0.20, $0.13, respectively.
Many users including market makers and arbitrageurs reported substantial losses as the exchange’s system degradation stopped them from accessing primary markets and executing hedges.
Amid the reports that Binance’s limited reporting masked the true scale of the liquidation cascade, other industry findings allege that the crash may have been an orchestrated exploit.
Meanwhile, the exchange has since announced a $283 million compensation plan for verified users and acknowledged the reporting flaws, promising future risk-management recalibrations.
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