Hyperliquid News Today: CEX Liquidation Secrecy vs. DeFi's On-Chain Clarity: A Trust Battle Unfolds

Hyperliquid Founder Slams Centralized Exchanges for Hiding Liquidation Data

Jeff Yan, co-founder of decentralized exchange Hyperliquid, has accused major centralized exchanges (CEXs) like Binance of underreporting user liquidations during volatile market conditions, sparking a heated debate over transparency in crypto trading. Yan's criticisms, posted on X, highlight a perceived lack of accountability at CEXs, where he claims liquidation data is often obscured or aggregated in ways that mislead traders. "Hyperliquid's fully on-chain liquidations cannot be compared with underreported CEX liquidations," Yan wrote, emphasizing that on-chain systems allow real-time verification of trades and liquidationsHyperliquid Founder Flags Transparency Issues at CEXs^[1].

The controversy intensified after a recent market crash erased over $19 billion in leveraged positions, with Hyperliquid reporting $10.31 billion in liquidations while maintaining full uptimeHyperliquid Founder Calls Out Binance and CEXs for Hiding …^[3]. Binance, however, faced temporary technical issues that left users unable to close positions, fueling accusations of systemic opacity. Changpeng Zhao (CZ), Binance's founder, responded indirectly to Yan's claims, asserting that Binance and other BNB Chain ecosystem players spent hundreds of millions to "protect users" during the turmoil. He concluded his post with a veiled jab at Hyperliquid, stating, "Different value systems," a reference interpreted as defending CEX practicesHyperliquid Founder Flags Transparency Issues at CEXs^[1].

Yan's argument centers on the technical limitations of CEXs, which he says underreport liquidations by as much as 100 times during high-volume events. He cited Binance's documentation, which allegedly updates liquidation data only once per second, even when thousands of orders occur simultaneously. "Because liquidations happen in bursts, this could easily be 100x underreporting under some conditions," Yan explained. In contrast, Hyperliquid's on-chain model records every trade and liquidation publicly, enabling real-time solvency checks and fostering trustHyperliquid Founder Criticizes CEX for Inflated Liquidations^[4].

The debate underscores a growing divide between decentralized and centralized platforms. While CEX proponents argue that rate-limiting liquidation updates prevents server overload and maintains user experience, critics like Yan insist transparency is non-negotiable. "Transparency and neutrality are key reasons why fully on-chain DeFi is the ideal infrastructure for global finance," Yan stated, urging the industry to adopt higher reporting standardsHyperliquid Founder Criticizes Underreporting of Liquidations by …^[2].

Market participants are now scrutinizing how exchanges handle data during crises. CoinGlass data showed Binance reported 60% long-position liquidations, while decentralized platforms like Hyperliquid saw closer to 90%, raising questions about how volatility is perceived and managedHyperliquid Founder Calls Out Binance and CEXs for Hiding …^[3]. Meanwhile, Hyperliquid's recent HIP-3 upgrade, which allows permissionless deployment of perpetual futures markets, further cements its role as a transparent alternative to CEXsHyperliquid Founder Says Certain CEXs May Underreport Liquidations^[7].

As regulatory scrutiny mounts, the clash between CEX opacity and DEX transparency may redefine crypto market structure. Analysts argue that verifiable on-chain data is essential for fair markets, with some calling for stricter rules to ensure all exchanges provide auditable liquidation reports. For now, the dispute highlights a broader struggle between competing visions of financial infrastructure-one prioritizing speed and control, the other transparency and decentralization.