The crypto world just saw a huge shake-up. Last Friday, traders lost close to $20 billion as their leveraged bets quickly ended. This was the biggest liquidation event ever recorded for the crypto market in a single 24-hour period. Bitcoin, the biggest cryptocurrency, dropped sharply, losing $17,000 in just a few hours. Its price went below $105,000. Industry reports, like those from CoinGlass, showed about $16.8 billion in long positions and $2.5 billion in short positions were closed out. The total came to roughly $19.3 billion in losses.
But here’s the kicker: Was that the whole story? Jeff Yan, who co-founded the crypto exchange Hyperliquid, says no. He believes the real amount of money lost might be far higher than what official reports suggest.
The Hidden Figures
Yan made his point clear in a post on X (formerly Twitter) this Monday. He warned that the true figures for liquidations could be “100 times” worse than what we are being told. He suspects that centralized crypto exchanges, known as CEXs, are not fully reporting these numbers.
Hyperliquid’s fully onchain liquidations cannot be compared with underreported CEX liquidations
Hyperliquid is a blockchain where every order, trade, and liquidation happens onchain. Anyone can permissionlessly verify the chain’s execution, including all liquidations and their… pic.twitter.com/K5sv74LJgO
— jeff.hl (@chameleon_jeff)
Yan specifically pointed out Binance, one of the world’s largest exchanges. He argued that Binance’s reporting system might limit liquidation orders to just one per second. This happens even when thousands of such events are taking place at the same time during extreme market swings. Yan cited Binance’s own public documents for this claim.
Think about it: If thousands of liquidations happen in a flash, but only one is counted each second, the total reported number would be much lower than reality. Yan called this a major risk. It means traders and the market don’t get a clear picture of how much risk is truly out there or how much money is actually being lost. It’s like looking at a small puddle when there’s a massive flood.
Transparency and Technical Troubles
Hyperliquid operates differently. It’s a decentralized exchange, or DEX, meaning everything happens on the blockchain. Every order, trade, and liquidation is recorded directly and publicly. This makes it impossible to hide data. Yan highlighted this as a key difference from the more private operations of CEXs. For him, this transparency is vital for trust and security in the financial system of tomorrow.
Even Binance admitted it had serious problems during last Friday’s chaos. Its platform faced “critical inconveniences.” The price of several tokens, including Ethena’s USDe, lost their peg to the dollar. USDe, the third-largest stablecoin by market value, dropped to 65 cents on Binance, making user losses even worse.
Binance executives quickly apologized. They announced two payments totaling $283 million to make up for losses. These payments were for users affected in futures, margins, and loans where USDe, BNSOL, or WBETH were used as collateral.
This whole episode, with nearly $20 billion wiped out, has sparked a big discussion. People are questioning how crypto companies manage risk and report their data. Yan and others are pushing hard for more openness. They believe it’s the only way to build a credible and secure financial future for crypto.
Despite the recent market turmoil, there are signs of recovery. Bitcoin’s price has already jumped 2.5%, climbing back to over $114,000, according to CoinGecko data at the time this article was put together.