A coordinated attack on the Hyperliquid protocol resulted in losses of about $4.9M from its HLP vault. The attacker sacrificed $3M of personal capital to manipulate the POPCAT market, causing a chain reaction of forced liquidations. The incident became one of the largest single strikes against the platform since its launch. Notably, the manipulator lost their entire investment during the operation.
Attack Mechanism
According to analytics firm Lookonchain, the attacker withdrew $3M in USDC stablecoins from the OKX exchange and split the funds across 19 new wallets. The trader then transferred the assets to Hyperliquid and opened leveraged long positions worth over $26 M tied to the perpetual contract HYPE, denominated in POPCAT.
Next, the attacker placed a massive $20M buy wall near $0.21, creating the illusion of strong market support. The move pushed prices higher before the orders were suddenly canceled. When the wall disappeared, liquidity collapsed as price support vanished, triggering dozens of forced liquidations on highly leveraged positions. The HLP vault absorbed the losses, totaling $4.9M.
During the peak of the incident, the Hyperliquid bridge temporarily paused withdrawals. The project’s developer explained that this was a precautionary response to prevent further manipulation. The platform resumed normal operations roughly an hour later.
Deliberate Damage Instead of Profit
Lookonchain reported that although the attack harmed Hyperliquid, the trader’s $3M equity was completely destroyed. This suggests the attacker’s goal was structural damage rather than financial gain.
The trader deliberately burned their capital to shock the off-chain derivatives platform, stress-test its liquidity architecture, and expose weaknesses in its automated liquidity vault.
Community Reaction
The event sparked heated debate across the crypto community, dividing opinions on the trader’s motives. Some users called the act “pure insanity,” while others described it as “a performance with deeper intent.”
User Vince Crypto commented:
“Pretty wild how someone burned $3M of their own money just to punch a hole in Hyperliquid’s liquidity… call it dedication or call it stupidity.”
He added that withdrawing $3M in USDC from OKX, splitting it into 19 wallets, and launching a $26M leveraged long “nuke” on HYPE charts was “crazy behavior.”
Another participant, Abhi.sol, viewed the incident as a form of art:
“This isn’t an attack, it’s $3M performance art. Only in crypto do villains burn millions for the story,” he wrote.
Some commentators focused on protocol vulnerabilities. User Casper noted that Hyperliquid’s system was unprepared for a coordinated manipulation:
“No checks on linked wallets building the same positions. No defense against fake buy or sell walls inflating price. HLP took synthetic losses from artificial volatility.”
At the same time, another community member, Skyfall, suggested the trader might have been smarter than people assumed and may not have actually lost money:
“Anyone saying he burned his own funds is naive… he probably opened a hedged short on another exchange and made ten times more after POPCAT crashed. Stop celebrating – these people know more than we do.”
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