Ever wondered if the crypto numbers you see on big exchanges tell the whole story? In a market where billions vanish in a blink, transparency isn’t just nice—it’s essential for trust. Enter Jeff Yan, the brains behind Hyperliquid, who’s sparking a firestorm by accusing giants like Binance of hiding the true scale of trader wipeouts during crashes. This isn’t insider gossip; it’s a call for clarity that could change how we view centralized platforms versus decentralized ones. Let’s dive into the drama that’s got everyone from casual holders to pro traders buzzing.
The Crypto Crash That Started It All
Picture a typical Friday in crypto: prices dipping, then plunging into chaos. On October 10-11, 2025, the market took a nosedive, wiping out over $19 billion in positions and affecting more than 1.6 million traders. It was one of those brutal events where leveraged bets go bust en masse, known as liquidations—when exchanges forcibly close positions to cover losses.
Data from platforms like CoinGlass painted a grim picture, but according to reports, Hyperliquid bore the brunt with $10.3 billion in liquidations alone. This crash wasn’t isolated; it highlighted ongoing tensions in how exchanges handle and report these events. As CoinTelegraph detailed, such undercounts could distort our understanding of market risks, making volatility seem tamer than it is.
For everyday folks, liquidations are like getting margin-called on steroids—if your bet goes wrong, the exchange sells your assets to pay up, often at the worst prices. This event amplified calls for better data, setting the stage for Yan’s bold claims.
Meet Jeff Yan: The DeFi Disruptor
Jeff Yan isn’t your average crypto figure; he’s a Harvard math whiz turned high-frequency trader who built Hyperliquid into a powerhouse for decentralized perpetual futures. Starting from Hudson River Trading, Yan pivoted to crypto, creating a platform that’s fully on-chain—meaning every trade and liquidation is verifiable on the blockchain, no secrets.
His background in competitive physics olympiads and tech leadership gives him cred when he critiques the industry. Hyperliquid’s rise, boasting billions in daily volume, positions it as a rival to centralized exchanges (CEXs). Yan’s outspoken style on X (formerly Twitter) has made him a voice for DeFi purists, as seen in threads where he dissects exchange flaws without mincing words.
Yan’s Bombshell Accusations Against CEXs
In a scathing X thread on October 13, 2025, Yan targeted Binance and other CEXs, claiming they dramatically underreport liquidations—potentially by 100 times during high-stress periods. He pointed to Binance’s API, which only updates liquidation data once per second, even if thousands occur in that timeframe. This “rate-limiting” hides the real frenzy, Yan argued, turning exchanges into “black boxes” where users can’t see the full picture.
TradingView echoed this, noting how such practices occur amid market crashes, eroding trust. Yan didn’t stop at tech details; he tied it to broader beefs, like alleged wash trading and fake volumes, suggesting CEXs prioritize image over accuracy.
Why does this matter? For traders, underreported data means underestimating risks—like thinking a storm is a drizzle until you’re soaked. Yan contrasted this with Hyperliquid’s transparent model, where everything’s public on-chain.
Breaking Down the 100x Underreporting Claim
Let’s simplify: In a liquidation cascade, positions close rapidly, sometimes thousands per second. But if an exchange’s system only reports one per second, it’s like counting cars in traffic by noting just one every minute—you miss the jam. Yan estimated this leads to 100x undercounts, backed by comparisons between CEX reports and on-chain data from DeFi platforms.
Tekedia reported on this, highlighting how the $19B crash exposed these gaps, with Hyperliquid’s figures dwarfing others due to full disclosure. Independent analyses from sources like ForkLog support Yan’s view, warning that CEXs’ methods materially distort totals. For non-experts, it’s akin to a bank hiding overdraft fees; without full info, you’re flying blind.
The Backlash and Industry Responses
Changpeng Zhao (CZ), Binance’s former CEO, fired back on X, defending their documentation while questioning Yan’s motives. This exchange heated up the DeFi vs. CEX debate, with users like @martypartymusic summarizing the feud as a “transparency war.” CryptoPolitan noted the timing, linking it to Hyperliquid’s market share gains and ongoing rivalries.
Community reactions vary: Some praise Yan for exposing flaws, while others see it as competitive sniping. Bitget’s coverage emphasized how this could push regulators to demand better reporting, benefiting everyone.
Hyperliquid’s HIP-3 Upgrade: Pushing for Change
Amid the controversy, Hyperliquid launched its HIP-3 upgrade on October 13, 2025, allowing users to create custom perpetual futures exchanges permissionlessly. This move amplifies DeFi’s appeal by enabling anyone to launch markets with built-in transparency—no APIs needed, just blockchain verification.
Bitcoinist highlighted how HIP-3 democratizes trading, potentially drawing users away from CEXs amid trust issues.
Graphic representation of Hyperliquid’s HIP-3 upgrade, symbolizing the shift to permissionless DeFi trading.
Yan tied this to his critiques, positioning Hyperliquid as the antidote to CEX opacity.
Lessons for Everyday Crypto Users
If you’re just holding Bitcoin or dipping into altcoins, this scandal underscores a key lesson: Not all platforms are equal in honesty. Stick to verifiable data—check on-chain metrics or use tools like CoinGlass for cross-verification. Diversify between CEXs and DeFi to spread risks, and always trade with what you can afford to lose.
As AInvest put it, this battle between secrecy and clarity could redefine trust in crypto. Stay curious, question the numbers, and watch how this unfolds—it might just make the market fairer for all.
