The cryptocurrency market experienced its largest liquidation event in history on Friday, wiping out over $19 billion in leveraged positions and stress-testing the industry's core infrastructure. In the aftermath of the market crash, centralized exchanges (CEXs) like Binance are now facing intense scrutiny over their performance and accusations of massively underreporting liquidation data. In stark contrast, a number of decentralized finance (DeFi) protocols reportedly weathered the storm with minimal disruption, a display of DeFi resilience that has reignited the debate over the future of crypto market structure.

• The largest forced sell-off in crypto history has just occurred, but are the reported numbers the full story?
• The technical reason why one exchange's liquidation figures could be under-reported by a factor of 100 during extreme volatility.
• Learn about the user experience on major exchanges during the crash, which included frozen buttons and phantom $0 prices.

The brutal sell-off on Friday, which saw Bitcoin fall to $102,000 and Ether to $3,500, triggered a cascade of forced liquidations across the market. However, a growing chorus of analysts and industry leaders is now questioning the official figures. Jeff Yan, co-founder of the decentralized exchange Hyperliquid, alleged that the way centralized exchanges report liquidation data could lead to a dramatic underrepresentation of the true scale of the event. He pointed to Binance's documentation, which explains that its data stream only includes the latest liquidation event in each one-second interval. During periods of intense volatility, Yan argued, there can be over 100 liquidations per second, meaning the official data "could easily be 100x under-reporting."

This accusation was echoed by the data platform CoinGlass, which stated that "the actual [liquidated] amount was likely much higher." This raises critical questions about market transparency on centralized exchanges, which, despite their dominance, often operate as "black boxes" during periods of extreme stress.

Beyond the data discrepancies, the user experience on some major platforms appears to have degraded significantly during the market crash. Binance CEO Yi He acknowledged in a statement that some functional modules "did experience brief lags," but maintained that the core trading engines remained stable. However, this official account stands in contrast to widespread user reports of frozen "stop" and "limit" order buttons, with one influencer noting that "only liquidations were executed perfectly." Adding to the chaos, users reported seeing the prices of some major altcoins drop to $0 on the exchange, an anomaly Binance later attributed to a "display issue" related to decimal place changes, not actual market prices.

In stark contrast, many DeFi protocols demonstrated remarkable stability. This apparent DeFi resilience was most evident in the performance of the Ethena USDe stablecoin. On centralized exchanges like Binance and Bybit, USDe severely de-pegged, falling as low as $0.70. However, on the decentralized exchange Curve, it maintained its peg. Ethena's founder confirmed that minting and redemptions for USDe worked "perfectly" through DeFi protocols during the entire event, with over $2 billion redeemed in 24 hours. This suggests that the on-chain, automated systems of DeFi were more robust than the centralized infrastructure of their larger rivals.

This narrative of DeFi resilience was further supported by Hyperliquid, which reported "zero downtime or latency issues" despite record traffic. This performance is a powerful validation for decentralized systems, especially as they compete for the trust of a market that has become increasingly institutional. The timing of this stress test is crucial, as it comes just as major players like Morgan Stanley have opened the gates for their clients to invest in crypto funds, a move predicated on the assumption of a maturing and stable market infrastructure.

The event also highlights the systemic importance of the stablecoin market, which recently surpassed the $300 billion mark. The de-pegging of a major stablecoin like USDe on centralized exchanges was a key trigger for the cascading liquidations. The fact that the same asset remained stable in DeFi points to fundamental architectural differences.

This historic market crash has served as an involuntary, real-world stress test for the entire crypto ecosystem. While the dust is still settling, the initial evidence suggests it has exposed potential weaknesses in the transparency and performance of some of the industry's largest centralized players, while simultaneously showcasing the surprising DeFi resilience of their on-chain counterparts. The lessons learned from this event will undoubtedly shape the development and the long-term ambitions of companies like Coinbase, whose goal of becoming a global "super app" depends on flawless performance during exactly these kinds of high-stakes moments.

FAQs

What caused the recent crypto market crash?
The market crash was a broad sell-off reportedly triggered by an announcement from U.S. President Donald Trump regarding sweeping tariffs on China, which led to a cascade of forced liquidations of leveraged positions.

What is the main accusation against centralized exchanges?
The core accusation, led by industry experts, is that the official liquidation data from some centralized exchanges is likely a massive under-representation of the true number of liquidations, potentially by as much as 100 times, due to technical limitations in their data reporting systems.

How did DeFi platforms perform differently during the crash?
Multiple reports indicate a high degree of DeFi resilience. For example, the USDe stablecoin, which de-pegged severely on major centralized exchanges, reportedly held its peg on the decentralized exchange Curve. Other DeFi platforms like Hyperliquid reported zero downtime.

What was Binance's official response to the issues?
Binance's CEO acknowledged "brief lags" in some secondary systems and de-pegging in certain wealth products but stated that the core trading engines remained stable. The company attributed the $0 price anomalies to a "display issue" and not actual market data.