Hyperliquid accused centralized exchanges (CEXs) of hiding or underreporting liquidation data. The team claims this non-disclosure misleads traders and distorts market stability.
Hyperliquid does not operate like traditional exchanges. Every trade, order, and liquidation happens on-chain. They believe transparency is what global finance should be all about.
What Makes Hyperliquid Different?
Hyperliquid is a Layer-1 blockchain that merges order-book trading with on-chain transparency. You can observe all trades and liquidations on the blockchain. No information is out of reach.
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) October 13, 2025
Here’s how the liquidation system works:
- If a trader’s balance drops below the margin, Hyperliquid steps in. It first tries to close the position using on-book orders.
- If that fails, a backstop liquidation uses the liquidator’s vault.
- Hyperliquid uses a mark price system that blends CEX prices with its own data. This helps prevent unfair liquidations.
- In large trades, Hyperliquid does partial liquidations to reduce market interference.
Such a structure brings equity and real-time solvency verification, which traditional CEXs do not have.
CEXs Under Fire for Underreporting
Hyperliquid’s founders say many CEXs underreport liquidation events. Binance and many others are on the list. These exchanges often show only one liquidation, even when thousands happen in a second.
JUST IN: Hyperliquid $HYPE founder Jeff 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/jLoU69lGDr
— Whale Insider (@WhaleInsider) October 13, 2025
Actual liquidation numbers could be 10x to 100x higher than reported. Analysts say actual crash liquidations may be 19× higher than reported. Critics argue that this selective reporting artificially calms markets and hides real risks. It deceives traders, they say, and gives them a false sense of security.
Why It Matters?
The transparent structure of Hyperliquid allows anyone to confirm the liquidations. You can track different essential events, including losses exceeding $100 million on-chain. But not everyone agrees. Some argue that CEXs simplify data feeds to reduce bandwidth or clutter, rather than to mislead. Others claim that Hyperliquid has not gone through a proper test at the CEX scale.
TLDR: During recent volatility, Hyperliquid had 100% uptime with zero bad debt. This was Hyperliquid’s first cross-margin ADL in more than 2 years of operation. ADL does not change the outcome for any liquidated users. While some specific ADL providing trades were unfavorable,…
— jeff.hl (@chameleon_jeff) October 11, 2025
Conclusion
Hyperliquid sets a new transparency standard in crypto trading. Ensuring every action is visible on-chain questions the opaque nature of some CEXs. Calls for openness and fairness in trading are on the rise, regardless of whether people agree with them.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted levels of risk tolerance of the writer/reviewers, and their risk tolerance may be different from yours.
We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence.
