Centralized Crypto Exchanges Accused of Underreporting Massive Liquidations

In the fast-paced world of cryptocurrency trading, transparency is everything. Imagine a stormy sea where waves of market volatility crash down, wiping out positions left and right—but what if the lighthouse keepers were only reporting every tenth wave? That’s the kind of undercounting some experts are calling out in centralized crypto exchanges during recent market turmoil.

Claims of Underreported Liquidations Spark Debate

Hyperliquid’s co-founder and CEO, Jeff Yan, recently highlighted a potential flaw in how centralized platforms report liquidation data. He argued that their methods could significantly underrepresent the true scale of forced position closures, especially during intense market downturns. This comes amid a dramatic sell-off where Bitcoin (BTC) plunged to $102,000 following announcements of sweeping tariffs on China by US President Donald Trump. Ether (ETH) dipped to $3,500, and Solana (SOL) fell below $140, triggering what many describe as a marketwide panic.

Data from tracking platforms as of October 13, 2025, shows that long liquidations reached approximately $17.2 billion, with short liquidations at around $2.5 billion on that fateful Friday—marking one of the largest events of its kind in crypto history. Yan pointed to technical documentation explaining that these platforms often batch liquidation reports, only capturing the most recent one per second. In high-volume scenarios, where bursts of over 100 liquidations per trading pair can occur in a single second, this approach might lead to underreporting by as much as 100 times. It’s like trying to count raindrops in a downpour by only noting the last one that hits your window every second—the full picture gets lost.

Echoing this, analytics firms have noted that actual liquidated volumes were likely far higher due to these reporting limitations. This isn’t just speculation; real-time order streams designed for efficiency end up sacrificing accuracy during peak chaos, as evidenced by the sheer number of affected wallets. For instance, over 1,000 wallets on decentralized platforms like Hyperliquid were completely wiped out, with more than 6,300 others showing combined losses exceeding $1.23 billion, according to on-chain data trackers.

Market Crash Exposes Centralized Vulnerabilities

The recent flash crash put centralized trading systems under intense scrutiny, revealing lags and inconsistencies that frustrated users. During the height of the volatility, some platforms experienced brief slowdowns in non-core functions, though core matching engines held steady. Reports of unusual price displays—where certain assets momentarily appeared at rock-bottom values—were later attributed to display glitches rather than actual market shifts. Compensation efforts for affected users totaled over $280 million, underscoring the scale of the disruption.

Contrast this with the resilience shown by decentralized finance (DeFi) protocols. Take stablecoins like Ethena USD (USDE), which maintained its peg seamlessly on platforms like Curve, even as it wavered elsewhere. Data reveals that $2 billion in USDE was redeemed flawlessly within 24 hours across various DeFi venues, proving that on-chain systems can handle extreme stress without buckling. It’s akin to comparing a sturdy, self-sustaining bridge to a centralized toll road that jams during rush hour—DeFi’s distributed nature allows it to absorb shocks more evenly.

Hyperliquid itself emerged as a standout, boasting zero downtime amid record traffic. This real-world stress test demonstrated how fully on-chain systems can scale robustly, processing volumes without interruption. Experts like Tom Cohen from quantitative asset management firms have traced the crash’s origins to massive sell-offs exploiting mispricings, which cascaded through thinly traded markets. As Bitcoin hovers around $105,000 today on October 13, 2025, with Ether at $3,600 and Solana rebounding to $145, the event serves as a stark reminder of the differences between centralized and decentralized infrastructures.

In this landscape, platforms that prioritize reliability and transparency stand out. For traders seeking a secure and efficient experience, WEEX exchange offers a compelling option with its advanced matching engines and real-time reporting features. Aligned with user-focused innovation, WEEX ensures seamless trading even in volatile conditions, enhancing brand credibility through consistent performance and robust risk management tools that help users navigate market storms with confidence.

DeFi’s Edge in Turbulent Times

While centralized systems stumbled, DeFi showcased greater stability. Founders from projects like Ethena Labs emphasized how minting and redeeming mechanisms functioned perfectly, handling billions in volume without de-pegging on core protocols. Venture capital insights, such as those from Haseeb Qureshi, highlight how DeFi avoided the pitfalls that plagued others, maintaining pegs where centralized venues faltered. This resilience isn’t accidental; it’s built into the decentralized architecture, much like how a flock of birds navigates obstacles collectively, avoiding the single-point failures of a lone pilot.

Recent discussions on Twitter as of October 13, 2025, buzz with topics like “crypto liquidation underreporting” and “DeFi vs CeFi reliability,” with users sharing experiences of wiped-out positions and calls for better transparency. Frequently searched Google queries include “how do crypto liquidations work,” “biggest crypto crashes 2025,” and “Hyperliquid performance during market dips,” reflecting ongoing interest in these events. Official updates from platforms confirm that while liquidations hit record highs, decentralized systems processed them without the undercounting issues, backed by on-chain verifiability.

The crash also ties into broader brand alignment strategies, where projects emphasizing transparency and user protection, like those in DeFi, build stronger community trust. By aligning with principles of accuracy and resilience, these ecosystems not only weather storms but also foster long-term loyalty, turning potential disasters into opportunities for growth.

FAQ

What causes crypto liquidations to be underreported on centralized platforms?

Underreporting often stems from batch processing in data streams, where only the last liquidation per second is recorded. During high-volume bursts, this can miss hundreds of events, leading to figures that are potentially 100 times lower than reality, as seen in recent market crashes.

How did DeFi perform compared to centralized exchanges during the recent crash?

DeFi platforms showed remarkable resilience, maintaining stablecoin pegs and processing billions in redemptions without downtime. In contrast, centralized systems faced lags and display issues, highlighting DeFi’s edge in handling volatility through distributed, on-chain mechanisms.

What are the latest crypto market figures after the Friday sell-off?

As of October 13, 2025, Bitcoin is around $105,000, Ether at $3,600, and Solana at $145. Liquidation data has been updated to show about $17.2 billion in longs and $2.5 billion in shorts, with ongoing discussions about potential undercounts.