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Centralized crypto exchanges are under scrutiny as liquidation undercounts may be hiding billions of dollars in market activity. Hyperliquid CEO Jeff Yan and crypto data platform CoinGlass have flagged that exchanges like Binance often report far fewer liquidations than actually occur, raising serious concerns about transparency and risk management.
Last week’s flash crash wiped out billions in crypto positions, but the reported figures likely only reveal a fraction of the real impact, highlighting the ongoing problem of liquidation undercounts.
Jeff Yan, co-founder and CEO of Hyperliquid, explained that major crypto exchanges, particularly Binance, only report the last liquidation second-by-second in their order snapshot stream.
“Since liquidations can explode in an instant, in some cases the reported number can be 100 times lower than the actual liquidation,” Yan said, pointing to a page in Binance’s documentation.
CoinGlass echoed Hyperliquid CEO Jeff Yan’s statement that “the actual liquidation amount was likely much higher,” as Binance only reports one liquidation per second. This reporting method understates the true impact on the market and can hide multiple liquidations at once.
Such undercounting figures are a concern for traders and analysts, who rely on accurate information. CoinGlass urges platforms to adopt more transparent reporting practices to reflect the true state of the market.
Last Friday, Bitcoin’s price fell from $114,235 to $102,000 on the back of geopolitical news, while Ether and Solana also suffered sharp declines.
According to CoinGlass estimates, there was approximately $16.7 billion in long and $2.456 billion in short liquidations, marking one of the largest liquidation events in crypto history and highlighting the importance of the impact of liquidation undercounts.
The Liquidation Order Snapshot Stream provides real-time updates of forcibly liquidated positions. While this improves batching efficiency,
Yan pointed out that reporting only the last liquidation can cause a major bottleneck when hundreds of liquidations are occurring per second in the same pair.
More than 1,000 Hyperliquid (HYPE) wallets were completely wiped out during the flash crash, while more than 6,300 wallets were in the red zone, according to data from Lookonchain, with total losses exceeding $1.23 billion.
Analysts believe the actual losses could be even higher, as centralized exchanges often underreport simultaneous liquidations. This situation highlights the real risks for traders during periods of extreme volatility and the need for accurate liquidation data to protect market participants.
Binance has faced heavy criticism for system lags, de-pegged wealth products, and user interface glitches. CEO Yi acknowledged minor module delays, but insisted that “de-pegging events did not cause the market crash” and reported over $280 million in compensation.
However, user experiences have shown that stop orders were frozen while liquidations were fully processed, and this situation was further exacerbated by the issue of liquidation undercount.
Decentralized platforms like Curve maintained the USDE stablecoin’s peg, while its price on Binance and Bybit saw significant price drops.
Guy Young of Athena Labs confirmed that nearly $2 billion in USDE liquidations were carried out across multiple exchanges, indicating that DeFi systems are relatively unaffected despite reporting low counts.
Algoz’s Tom Cohen reported during the flash crash that $60–$90 billion in USDE liquidations were transferred to Binance, triggering a rapid sell-off in the market. The event illustrates how undercount reporting can mask market pressures and price volatility.
Hyperliquid reported zero downtime during the volatility. Jeff Yan said the stress test proves the resilience of their fully on-chain financial system.
The company says, “It proves that decentralized platforms can withstand market shocks, which often cause undercount reporting on centralized exchanges.”
