Binance and Hyperliquid Clash Over Transparency After Massive Market Liquidations

Highlights:

• Binance and Hyperliquid clash after a major market crash highlights rising tension over liquidation transparency.
• Jeff Yan noted that some exchanges show fewer liquidations, which hides real market risk from traders.
• Accurate liquidation data helps traders understand risk levels and avoid losses during high volatility.

Hyperliquid founder Jeff Yan has accused major centralized exchanges of underreporting liquidation data. He said these exchanges often show far fewer liquidations than what actually happens during volatile trading sessions. According to Yan, thousands of liquidations can occur within one second, but only one may appear publicly. He said this could lead to underreporting by as much as 100 times.

Hyperliquid $HYPE founder Jeff Yan accuses centralized exchanges of underreporting liquidations by up to 100x, saying thousands can occur in a second but only one is shown publicly. pic.twitter.com/vA3lkFpytK

— Mayank Kharayat (@CryptokaGyan) October 13, 2025

Yan explained that a liquidation occurs when traders lose all the collateral in their leveraged positions. The exchange then closes those positions to prevent further losses. He noted that liquidation data shows how much risk exists in the market. When that data is incomplete, traders may believe that market conditions are safer than they truly are. Yan said this false perception of stability creates risk for both investors and exchanges.

He stressed that transparency is essential in crypto markets. Traders depend on correct information to know the price movements and make appropriate decisions in the market. The whole market is exposed to abrupt shocks when its information input is not full. Yan explained that this absence of transparency diminishes trust in users. He urged trading platforms to publish full liquidation reports to rebuild credibility and help traders assess real-time risks.

Binance and Hyperliquid Clash After Market Crash Exposes Data Gaps

The tension between Binance and Hyperliquid grew after the sharp market crash that took place between October 10 and 11. CoinGlass said that more than 1.6 million traders were liquidated during that period. It described the event as one of the biggest liquidation waves in crypto history.

Yan said the incident exposed how centralized exchanges handle transparency during extreme volatility. He claimed that Hyperliquid’s on-chain liquidation data gave users a complete view of market events, while Binance and others underreported the true numbers. “Even if thousands of liquidation orders happen at once, only one appears,” he said. “This could easily be 100 times lower than reality.”

Binance CEO Changpeng Zhao responded through a post on X. He said Binance and its ecosystem partners took hundreds of millions of dollars from their own funds to protect users during the crash. “Some people ask why BNB is so strong?” Zhao wrote. “While others try to shift blame or attack competitors, we focus on protecting users.” He ended his post by saying “different value systems,” a phrase widely viewed as a reply to Yan’s remarks.

Some people ask why is #BNB so strong?

While others tried to ignore, hide, shift blame, or attack competitors, the key @BNBChain ecosystem players (Binance, Venus, and more) took hundreds of millions out of their own pockets to PROTECT USERS.

Different value systems. 💪 https://t.co/zb0UIBfcBn

— CZ 🔶 BNB (@cz_binance) October 13, 2025

During the same crash, Hyperliquid processed between $50 billion and $70 billion in trading volume without interruption. Binance, however, faced technical issues that left some users unable to close positions for nearly an hour.

Binance Clarifies Past Ties as Transparency Debate Grows

After the dispute gained attention, Zhao addressed claims that Binance might have ties to Hyperliquid. He said Binance has no current investment relationship with the company. He explained that Jeff Yan joined Binance Labs’ first incubation program in 2018 through a startup named YZiLabs. The project later failed, and Binance did not recover its investment.

Gossip tweet. Saw a couple of posts on this topic:

If you didn't know, Jeff (HL) was part of the YZiLabs (Binance Labs back then) incubation season 1 cohort in 2018. 🤣

Unfortunately, that project failed. YZiLabs did not recoup any of its investment. It happens.

I did not… https://t.co/zUVtjQ3RCO

— CZ 🔶 BNB (@cz_binance) October 10, 2025

Hyperliquid has since grown independently and now operates on its own Layer-1 blockchain. It ranks among the leading decentralized perpetual trading platforms. Data from DefiLlama showed that Hyperliquid recorded $319 billion in trading volume in July, contributing to $487 billion across all DeFi perpetual markets that month.