Hyperliquid News Today: CEXs' 100x Liquidation Underreporting Sparks On-Chain Pushback

Hyperliquid's co-founder Jeff Yan has escalated his public critique of centralized cryptocurrency exchanges (CEXs), accusing platforms like Binance of systematically underreporting liquidation data during market volatilityHyperliquid Founder Criticizes CEX for Inflated Liquidations^[1]. The controversy has intensified amid a recent market crash that wiped out over $19 billion in leveraged positions, with Hyperliquid reporting $10.31 billion in liquidations-nearly half the total-while maintaining full operational uptimeHYPE jumps 10% as founder slams Binance for hidden liquidations^[4]. Yan argues that CEXs' opaque reporting practices create a "100x underreporting" effect, where thousands of liquidations in a single second are reduced to a single publicly visible eventHyperliquid founder accuses CEXs of hiding user liquidation data^[2].

Yan's claims are rooted in technical limitations of CEXs' liquidation order snapshot streams. For example, Binance's system updates liquidation data at a 1-second interval, potentially masking sudden bursts of activityHyperliquid Founder Calls Out Binance and CEXs for Hiding …^[3]. "On-chain systems allow anyone to verify trades, orders, and liquidations in real time," Yan stated on X, emphasizing Hyperliquid's fully on-chain infrastructure, where all transactions are publicly verifiableHyperliquid Founder Criticizes CEX for Inflated Liquidations^[1]. This transparency, he argues, is critical for ensuring market integrity and user trust.

The recent volatility, triggered by former U.S. President Donald Trump's announcement of 100% tariffs on Chinese goods, exposed systemic weaknesses in CEXs. During the crash, Binance faced technical outages that prevented users from closing positions for nearly an hour, while Hyperliquid processed $50–$70 billion in trading volume without disruptionBinance and Hyperliquid Clash Over Transparency After Massive …^[6]. Binance CEO Changpeng Zhao (CZ) pushed back indirectly, highlighting the exchange's $283 million compensation package for affected users and framing the dispute as a clash of "value systems"Hyperliquid Founder Calls Out Binance and CEXs for Hiding …^[3].

Market data underscores the disparity in reporting. Coinglass data shows Binance led liquidations with $15.25 million, followed by Bybit ($6.77 million) and OKX ($5.12 million), while Hyperliquid accounted for $922,330-2.44% of the totalHyperliquid Founder Criticizes CEX for Inflated Liquidations^[1]. Yan's criticism has sparked broader calls for transparency, with some traders advocating for "false wick liquidation protection" mechanisms to prevent unexpected losses during volatile periodsHyperliquid Founder Slams Binance, CEXs Blaming Then of 100x ...^[5].

Hyperliquid's recent HIP-3 upgrade further emphasizes its decentralized ethos, enabling permissionless creation of perpetual futures markets by staking 500,000 HYPE tokensHyperliquid Activates HIP-3 Upgrade, Enabling Permissionless …^[10]. The upgrade, activated October 13, aims to democratize market creation while maintaining safeguards like validator slashing and open interest caps. HYPE's price surged 13% post-announcement, reflecting investor confidence in the platform's transparency-driven model.

The debate has drawn regulatory attention, with Crypto.com's CEO urging investigations into both CEXs and decentralized exchanges (DEXs) following the liquidation surgeHYPE News: HIP-3 Upgrade to Allow Permissionless Perp Market …^[9]. Industry analysts suggest the controversy could accelerate a shift toward on-chain infrastructure, as traders increasingly prioritize platforms offering real-time, auditable dataJeff Yan Reignites Trust Debate in Crypto with Binance Accusation^[7].

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