A public dispute erupted between Hyperliquid founder Jeff Yan and Binance over liquidation transparency following last week's cryptocurrency market crash. Yan claimed some centralized exchanges dramatically underreported user liquidations during the volatility, while Binance's former CEO defended his platform's handling of the crisis that wiped out over $19 billion in leveraged positions.
What to Know:
- Hyperliquid's founder accused centralized exchanges of underreporting liquidations by a factor of 100 times during high-volatility events, citing Binance's data stream limitations that show only one liquidation even when thousands occur simultaneously.
- The clash followed Friday's market crash that pushed Bitcoin from $122,000 to $102,000, with Hyperliquid processing $50-70 billion in trading volume without downtime while Binance experienced technical issues.
- Yan and Binance founder Changpeng Zhao share a professional history dating to 2018, when Yan participated in the Binance Labs incubation program to develop a decentralized prediction market.
The Transparency Dispute
Yan wrote on X that Hyperliquid maintained 100% uptime with zero bad debt as HYPE prices collapsed toward $20 last week. The platform operates on a blockchain where orders, trades and liquidations occur on-chain, allowing anyone to verify transactions without permission.
But Yan identified what he called a "troubling trend" among centralized exchanges. He said these platforms publicly document far fewer liquidations than actually occur.
Using Binance as an example, Yan explained that the exchange's data stream reports only one liquidation order even when thousands happen at once. This technical limitation can mask the true scale of liquidations during market crashes, he wrote.
The underreporting factor could reach 100 times during extreme volatility, according to Yan's analysis.
His criticism targeted the opacity of centralized systems compared to blockchain-based platforms where all activity remains visible.
Changpeng Zhao, known as CZ, responded without directly addressing the liquidation data question. Instead, he pointed to Binance's financial commitment during the crisis. "While others tried to ignore, hide, shift blame, or attack competitors, the key BNBChain ecosystem players (Binance, Venus, and more) took hundreds of millions out of their own pockets to PROTECT USERS," he wrote.
From Partners to Competitors
The exchange between Yan and CZ carries added weight given their shared history. Yan joined the Binance Labs Investment Incubation Program in 2018 alongside co-founder Brian Wong. They worked on Deaux, a decentralized prediction market designed to facilitate collaborative betting through an international liquidity pool.
During the incubation period, Yan and Wong focused on creating a platform that matched centralized exchanges in user experience while adding blockchain security. Their goal was low fees and real-time feedback combined with smart contract protection and decentralized voting for settlements. The project aimed to replicate Binance's interface while eliminating centralized control.
Friday's market turmoil tested both platforms under stress conditions.
Bitcoin's drop from $122,000 to $102,000 triggered liquidations across the cryptocurrency market. Hyperliquid processed between $50 billion and $70 billion in trading volume during the crash without interruption, Yan said.
Binance encountered temporary technical problems that prevented some users from closing positions. The exchange processed liquidations totaling more than $19 billion as leveraged traders saw their positions automatically closed.
The competing narratives highlight a fundamental split in cryptocurrency infrastructure philosophy. Blockchain-based platforms like Hyperliquid prioritize transparency through public ledgers. Centralized exchanges emphasize speed and capital deployment to protect users during crises.
Understanding Key Terms
Liquidations occur when an exchange automatically closes a trader's leveraged position because losses have depleted the collateral backing that position. In traditional markets, this prevents traders from owing more than they deposited. Cryptocurrency markets can move fast enough that exchanges sometimes absorb "bad debt" when liquidations don't execute before losses exceed collateral.
On-chain activity refers to transactions recorded on a blockchain where anyone can view and verify the data. Centralized exchanges process most activity on internal databases, publishing only summary data. This creates an information asymmetry that favors the exchange.
Leveraged positions allow traders to borrow money to amplify potential gains, which also amplifies losses. A 10x leveraged position means a 10% price move results in a 100% gain or loss on the trader's collateral.
Market Impact and Current Status
HYPE traded at approximately $41.88 at press time, reflecting a 14% decline over the past week. The token gained more than 4% in recent hours but remains 28% below its all-time high. The recovery follows the broader market stabilization after Friday's crash.
The dispute raises questions about data transparency standards across cryptocurrency exchanges. As decentralized platforms gain market share, pressure may increase on centralized competitors to provide more granular liquidation data. Yan's critique struck at a competitive advantage for blockchain-based systems: verifiable transparency that doesn't depend on trust in a single entity.
Closing Thoughts
The clash between Hyperliquid and Binance extends beyond last week's market volatility to reflect competing visions for cryptocurrency infrastructure. Yan's accusations about liquidation underreporting challenged centralized exchanges to match the transparency blockchain systems provide by design. Whether regulators or market forces will push for standardized reporting remains uncertain.