Crypto industry debates who should pay when markets crash

Here’s a question that sounds like a philosophy seminar but is actually worth $19 billion: when a market crashes, who eats the loss? On October 10, 2025, a flash crash tore through crypto markets and produced what appears to be the largest single-day liquidation event on record. Approximately $19 billion in positions were wiped out. On Hyperliquid alone, over 6,300 wallets were liquidated. That kind of carnage exposes the plumbing. And the plumbing, in this case, is auto-deleveraging, commonly known as ADL. Here’s how it works in plain terms. When a trader gets liquidated, the exchange’s insurance fund is supposed to absorb the shortfall between the trader’s margin and their actual losses. But when the storm is bad enough, that fund runs dry. And when it runs dry, the platform has to find the money somewhere. That somewhere is the winning side of the trade. ADL kicks in and forcibly closes the positions of profitable traders, effectively using their gains to plug the hole. You called the direction right, sized your position correctly, managed your risk like a professional, and the platform still took your trade away. Not because you were wrong, but because the system couldn’t handl...