A coordinated strike against decentralized derivatives platform Hyperliquid resulted in losses of nearly $5 million in its Hyperliquidity Provider (HLP) vault.
Key points to remember:
- An attacker spent $3 million to manipulate Hyperliquid’s POPCAT market.
- The move resulted in losses of nearly $5 million for the platform’s hyperliquidity provider’s vault.
- The exploit involved splitting funds among 19 wallets and opening $26 million in leveraged long positions, followed by a $20 million fake buy wall that triggered cascading liquidations.
The loss came after an unknown trader deliberately sacrificed $3 million to manipulate the POPCAT market and trigger a cascade of liquidations.
Attacker split $3 million across 19 wallets to fuel hyperliquid assault
Blockchain analytics firm Lookonchain reported Thursday that the streak began when the attacker withdrew 3 million USDC from the OKX exchange, spreading it across 19 new wallets.
The trader then deployed the funds on Hyperliquid to open over $26 million in leveraged long positions tied to HYPE, the protocol’s POPCAT-denominated perpetual contract.
The attacker then built a $20 million buy wall near the $0.21 mark, creating the illusion of strong demand that briefly pushed the market higher.
When the wall suddenly disappeared, price support evaporated, liquidity dried up, and dozens of overleveraged positions were automatically liquidated.
Hyperliquid’s vault had to absorb the fallout, posting a deficit of $4.9 million, one of the largest single event losses in its history.
Ironically, the manipulator’s $3 million stake was entirely wiped out. Analysts believe this indicates a motive for structural disruption rather than financial gain, calling the event a deliberate stress test on Hyperliquide’s liquidity architecture.
Unlike conventional market exploits aimed at profit, this maneuver appeared aimed at revealing systemic weaknesses in liquidity providers’ automated vaults.
Reactions from the community ranged from disbelief to dark humor. One observer called it “the most expensive research ever done”, while another likened it to “performance art with real money”.
Others described the episode as “maximum degenerative warfare,” highlighting the risks of operating perpetual markets without robust liquidity reserves. “Perp markets are open to anyone who wants to set their money on fire,” one user wrote on X.
In response to the turmoil, community member Conor noted that Hyperliquid had temporarily suspended withdrawals, citing the platform’s “emergency vote lock” feature, a safeguard mechanism intended to prevent further manipulation.
Takedowns resumed about an hour later, although the team did not officially tie the pause to the POPCAT-related event.
Hyperliquid Strategies to Raise $1 Billion to Become the Largest HYPE Token Holder
As reported, Hyperliquid Strategies has filed an application with the United States Securities and Exchange Commission (SEC) to raise up to $1 billion, intending to use the proceeds to expand its crypto holdings and acquire additional HYPE tokens.
The move marks a major step in the company’s efforts to strengthen its presence in the decentralized derivatives market.
Chardan Capital Markets is advising on the offering, which includes up to 160 million shares of common stock.
The company will be formed from the merger between Sonnet BioTherapeutics and Rorschach I LLC, a SPAC deal that will form the new entity Hyperliquid Strategies.
Once completed, David Schamis will serve as CEO and former Barclays chief Bob Diamond will serve as chairman.
News of the filing sent HYPE token prices up 8% to $37.73, even as the broader crypto market declined slightly.
Once the merger is finalized, Hyperliquid Strategies is expected to hold 12.6 million HYPE tokens worth approximately $470 million, along with $305 million in cash reserved for further acquisitions, making it the largest holding company in HYPE.
Attacker Burns $3 Million to Drain $5 Million From Hyperliquid Vault in Coordinated Attack appeared first on Cryptonews.
