The decentralized Hyperliquid exchange became the target of a deliberate attempt to manipulate the market, which resulted in losses of more than USD 4.9 million for the HLP fund embedded on this platform. The incident led to a temporary suspension of deposits and withdrawals.
The course of the attack
According to analysis by an on-chain analyst known as “MLM”, an unknown trader withdrew 3 million USDC from the OKX exchange, then distributed the funds among 19 separate wallets. This was the first indication of the planned nature of the entire operation.
At approximately 2:45 p.m. CET, the aggressor began massively opening long positions on POPCAT memecoin using leverage. The total value of the position increased to approximately $30 million, and the trader placed buy orders worth approximately $20 million at a price of $0.21 per token.
Manipulation mechanism
The key moment came when the trader suddenly withdrew his own buy orders, creating a “wall” worth several dozen million dollars. Within seconds, POPCAT’s price plummeted, causing all of its $20-30 million long positions to be liquidated.
In accordance with the operating mechanism of the Hyperliquid platform, the HLP (Hyperliquid Liquidity Provider) fund automatically took over these liquidated positions. As the POPCAT price continued to decline from $0.21 to $0.13, the fund suffered losses of $4.9 million. The Hyperliquid team was forced to manually close the entire position.
Conscious action or incompetence?
Analysts unanimously emphasize that this was not an ordinary trading mistake. As MLM points out:
This was clearly a deliberate attack on HLP and Hyperliquid. No one loses $3 million in seconds through sheer stupidity or carelessness
The well-thought-out nature of the operation is confirmed by the details: withdrawal of funds from a centralized exchange, division into multiple wallets, coordinated actions and strategic withdrawal of purchase orders at a key moment. All this points to a planned attempt to use the platform’s mechanisms against itself.
Consequences and market reaction
Immediately after the incident, Hyperliquid temporarily suspended the operation of the Arbitrum Bridge, leaving other deposit and withdrawal methods unchanged. The platform team quickly resolved the issue and restored full functionality.
Surprisingly, the native token of the HYPE platform not only did not lose value, but actually gained 4.3 percent, increasing from USD 37.77 to USD 39.39. This market reaction suggests that investors appreciate the efficient management of the crisis by the Hyperliquid team and believe in the long-term stability of the project.
The incident is a reminder of the vulnerability of decentralized platforms to sophisticated attacks using leverage and automatic liquidation mechanisms. It is also a testament to risk management systems – despite significant losses, Hyperliquid managed to control the situation and maintain the trust of the community.
