DRW Holdings LLC founder Donald R. Wilson on Friday accused crypto exchanges of violating one of the most fundamental principles of trading. Neutral.
Speaking from Chicago just a week after the brutal and historic $19 billion liquidation that wiped out leveraged bets after President Trump rekindled ties with China, Wilson told Bloomberg that exchanges cannot continue to act as if they are both referees and players if they want cryptocurrencies to be taken seriously by institutional investors.
“If the virtual currency market seeks institutional credibility, exchanges need to truly be neutral trading venues,” he said.
Although Mr. Wilson did not name names, we believe his message struck a chord. He accused some platforms of injecting their own liquidity into trades during normal times and during turmoil, something that is completely separate in traditional finance.
“In traditional finance, this is a bright line,” Wilson said. “There’s a lot of ambiguity in cryptocurrencies, and that’s the problem.”
Exchanges halted deposits as traders scramble to stay afloat
Wilson said some platforms are not only blurring the lines, but shutting down altogether. He claimed that some exchanges suspended deposits during the decline, leaving traders unable to add funds to meet margin calls, which would be “unthinkable” in a well-run financial system.
“For TradFi to work on these new rails, these types of operational vulnerabilities need to be fixed,” Wilson explained. While Cumberland continued to trade during the crash, other stocks were stuck with no way to protect their positions.
Another issue raised by Donald was the lack of a futures trading merchant (FCM) for cryptocurrencies. In a traditional setup, the FCM stands between the trader and the exchange. Soften the blow when volatility increases.
Without that, there is no cushioning, Wilson warned. “Most crypto platforms do not include this kind of FCM-like buffer, making this approach much more difficult,” he said. “As we saw last week, positions are marked and liquidated immediately, and when liquidity dries up, there is no intermediary capital to cushion the shock.”
During the crash, around $131 billion was lost in altcoins alone, driven down by fear, thin order books, and automated trading systems. At one point, $7 billion evaporated in just 60 minutes. From New York to Singapore, invisible automated checkout bots have flooded order books, leaving traders devastated. As one research team puts it, “If you are a fully on-chain cryptocurrency decadent trader, you have witnessed Armageddon.”
Bitcoin’s dominance has declined as altcoins collapse under pressure
The impact wasn't just limited to price charts. Based on data from CoinMarketCap, Bitcoin's share of the overall cryptocurrency market has fallen to 58.5% from nearly 65% in July.
This shift is significant, and whenever Bitcoin's dominance declines before a crash, disruption usually follows. That happened in 2019, when dominance dropped from 70% to 38% just before another major wipeout. This pattern repeats in 2022 and again in 2025.
After the dust settles, the advantage usually returns as investors retreat to safer assets. This time, the market as a whole lost about $380 billion, wiping out weeks of gains. Liquidity has dried up. The story lost momentum. Day traders were watching altcoins soar.
With no circuit breakers and no one on the other side of the transaction, automated systems went wild. The same plumbing that keeps the cryptocurrency market running 24/7 ensures that losses don't stop even when prices start to fall.
The margin call was executed by a bot, not a broker. The collateral was immediately liquidated. There was no mercy, no delay, no room for reaction.
A technical glitch at Binance made the crash even worse, and the company later announced that it had paid $283 million in compensation to affected users. The company said the defect was not the cause of the market crash.
“Hyperliquid is a blockchain where all orders, transactions, and liquidations occur on-chain,” platform co-founder Jeff Yang later said in an X post. “Anyone can verify the execution of the chain, including all clearing and fair execution for all users, without permission.”
