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A coordinated strike against the decentralized derivatives platform Hyperliquid resulted in almost $5 million in losses from its Hyperliquidity Provider (HLP) turn.
Key tips:
- An attacker burned $3 million to manipulate Hyperliquid’s POPCAT marketplace.
- The move caused almost $5 million in losses at the turn of the platform’s Hyperliquidity Provider.
- The exploitation involved splitting funds through 19 wallets and opening $26 million in leveraged loans, followed by a false $20 million 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.
The attacker spread 3 million dollars in 19 wallets to fuel the hyperliquid assault
The Blockchain analytics company Lookonchain reported on Thursday that sequence began when the attacker withdrew 3 million USDC from the OKX exchange, distributing it to 19 new wallets.
The trader then deployed the funds on Hyperliquid to open more than $26 million in leveraged long positions linked to HYPE, the protocol’s POPCAT perpetual contract.
The attacker began building a $20 million buying wall near the $0.21 mark, creating an illusion of strong demand that briefly drove 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 was left absorbing the fallout, recording a deficit of $4.9 million, one of the largest single-event losses in its history.
Ironically, the manipulator’s own $3 million stake was completely wiped out. Analysts say this point to a reason for structural disruption rather than financial gain, marking the event as a deliberate stress test on Hyperliquid’s liquidity architecture.
Unlike conventional market exploits designed for profit, this maneuver appeared to be aimed at exposing systemic weaknesses in the vaults of automated liquidity providers.
Community reactions ranged from disbelief to dark humor. Un observatore l’hà chjamatu a “ricerca più costosa di sempre”, mentre chì un altru l’hà paragunatu à “l’arti di spettaculu cù soldi veri”.
Others have described the episode as a “degene peak war”, underscoring the risks of operating perpetual markets without strong liquidity buffers. “Perp markets are open season for anyone who wants to light money on fire,” one user wrote on X.
In response to the uproar, community member Conor noted that Hyperliquid has temporarily paused withdrawals, citing the platform’s “emergency lockout” feature, a safeguard mechanism to prevent further manipulation.
The withdrawals resumed about an hour later, although the team did not officially connect the break to the POPCAT event.
Hyperliquid strategies to raise $1B to become the largest HYPE token holder
As reported, Hyperliquid Strategies filed with the US Securities and Exchange Commission (SEC) to raise up to $1 billionwith plans to use the procedures to expand their cryptocurrencies and acquire additional HYPE tokens.
The move marks a major step in the company’s push 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 is emerging from the merger between Sonnet BioTherapeutics and Rorschach I LLC, a SPAC arrangement that will form the new entity Hyperliquid Strategies.
Ultimately, David Schamis will serve as CEO and Bob Diamond, former head of Barclays, will assume the role of 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 closes, Hyperliquid Strategies is expected to hold 12.6 million HYPE tokens worth approximately $470 million, alongside $305 million in cash set aside for further acquisitions, making it the largest corporate holder of HYPE.
