Centralized crypto exchanges underreport liquidations: Hyperliquid CEO

Hyperliquid co-founder and CEO Jeff Yan claimed that the way centralized crypto exchanges, and a certain major exchange specifically, report data is likely to underrepresent liquidations.

In a Monday X post, Yan pointed to a documentation page on the world’s top crypto exchange explaining that the platform will only include the latest liquidation happening in each second interval in the order snapshot stream.

“Because liquidations happen in bursts, this could easily be 100x under-reporting under some conditions,” Yan wrote.

Yan’s statement echoed a Saturday X post from a crypto data platform. The platform said that “the actual [liquidated] amount was likely much higher” since “a major exchange only reports one liquidation order per second.”

$19 billion liquidation event

Bitcoin (BTC) fell to $102,000 on Friday after US President Donald Trump announced sweeping tariffs on China. Similarly, Ether (ETH) fell to $3,500, and Solana (SOL) dropped below $140 in a marketwide sell-off.

Data indicated that Friday saw $16.7 billion of long liquidations and $2.456 billion of short liquidations, the biggest liquidation event in crypto history.

The Liquidation Order Snapshot Stream is a data stream that pushes real-time updates about force-liquidated positions. Batching outputs this way allows for higher performance, but Yan explained that only reporting the last liquidation may lead to underreporting of mass liquidation events, as they process more than 100 liquidations per pair per second.

Yan’s comments follow over 1,000 Hyperliquid (HYPE) wallets being completely wiped out in the market crash on Friday. According to data, over 6,300 wallets are in the red with combined losses exceeding $1.23 billion.

Centralized finance stumbled

Centralized crypto trading platforms ran into numerous issues during the flash crash. A major exchange, in particular, has attracted considerable criticism over multiple reported issues.

In a Sunday X post, the CEO of this exchange said their core contract and spot matching engines, as well as API trading, remained stable throughout the event. She admitted, however, that “some individual functional modules of the platform did experience brief lags, and certain wealth management products experienced de-pegging.”

Still, she claimed that depegging events did not cause the market crash and that the peg happened because of, and after, the downturn itself. She also said that the exchange “initiated and completed compensation” for users affected by the depegging, which amounted to over $280 million.

Still, widespread reports indicate that the price of some major altcoins reached $0 on this exchange at the time of the mass liquidations. A pseudonymous crypto influencer shared their experience during the downtime:

“On the exchange, buttons stopped working. Stop orders froze, limit orders hung, only liquidations were executed perfectly.”

The exchange later said the anomaly was a “display issue,” caused by changes to minimum price decimals for pairs such as IOTX/USDT, and not actual market data:

“Certain trading pairs, such as IOTX/USDT, recently reduced the number of decimal places allowed for minimum price movement, causing the displayed prices in the user interface to be zero, which is a display issue and not due to an actual $0 price.”

DeFi platforms show greater resilience

The Ethena USD (USDE) stablecoin maintained its peg on a decentralized finance (DeFi) protocol, but it went severely off-peg on two major centralized exchanges. In a Saturday X post, Haseeb Qureshi — a managing partner at a crypto venture capital fund — pointed out that USDE hit $0.95 on one exchange and well under $0.70 on another, but did not lose its peg on the DeFi protocol.

Guy Young, the founder of Ethena Labs, said that USDe minting and redeeming worked “perfectly” during Friday’s flash crash. Data he shared showed that $2 billion in USDe was redeemed during 24 hours across crypto exchanges, including several DEXs.

Tom Cohen, head of investment and trading at a quantitative crypto asset management firm, said that “the start can be traced to roughly $60–$90 billion of USDe simultaneously dumped onto a major exchange to exploit a mispricing and this triggered a series of large sell-offs.” This sell-off, he said, “moved thinly traded markets very quickly.”

Hyperliquid can also pat itself on the back following the reported centralized exchange outages. The platform wrote in a Saturday X post that “during the recent market volatility, the Hyperliquid blockchain had zero downtime or latency issues despite record traffic and volumes.”

“This was an important stress test proving that Hyperliquid’s decentralized and fully on-chain financial system can be robust and scalable,” the post stated.