(Bloomberg) — Donald R. Wilson, founder of Chicago-based trading powerhouse DRW Holdings LLC, criticized the practices of digital asset exchanges during last week’s crypto market crash, where cascading liquidations led to record losses. “If crypto markets aspire to institutional credibility, then exchanges must be just that: neutral trading venues,” Chicago-based Wilson said in a comment on Friday. DRW’s Cumberland unit is one of the largest trading and market making firms in crypto. Without naming any specific exchanges, Wilson castigated the platforms for providing liquidity on their own venues, both when there was a large liquidation event like last Friday and during normal times. “In traditional finance, it’s a bright line,” he added. “In crypto, it’s often vague, and that’s a problem.” His comments came after a record $19 billion worth of bets in crypto evaporated last Friday, sending prices across cryptocurrencies tumbling. The sell-off is the largest one-day liquidation event in crypto history, bigger than the collapse of TerraUSD and FTX’s explosion. Since the crash, there has been more discussion in crypto about how to avoid such large-scale liquidation events in the future. Cumberland continues to conduct business as usual, a spokeswoman said. Wilson also said that certain exchanges reportedly suspended deposits during the sale, which he called “unthinkable” in traditional financial market plumbing, and that caused additional volatility. This is because many traders were unable to add deposits to meet margin calls. “This is the kind of operational fragility that needs to be fixed in order for tradfi to operate on these new rails,” he said. At the same time, Wilson said the crypto market could benefit from the role of futures commission dealers, or FCMs, who can act as a buffer between clients and the exchange, especially in a market where real-time margins exist. “Most crypto platforms don’t have this type of FCM-like buffer in the mix, which makes this approach much more challenging,” Wilson said. “Positions are immediately marked and liquidated and when liquidity dries up, there is no intermediary capital to cushion the shock, as we saw last week.” More stories like this are available on bloomberg.com ©2025 Bloomberg LP
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