Hyperliquid Halts Trading After $4.9M Manipulation Of POPCAT

Hyperliquid, a decentralized perpetual platform, halted deposits and withdrawals on Wednesday following a market manipulation incident involving the POPCAT token. The manipulation resulted in approximately $4.9 million in losses for Hyperliquid Providers (HLP).

According to on-chain data, a trader attempted to artificially inflate the price of POPCAT. The incident occurred when the trader withdrew $3 million USDC from OKX, distributing it across 19 wallets before transferring it to Hyperliquid.

The trader then accumulated $26.28 million (125.14 million HYPE) in long positions on POPCAT, creating an appearance of strong buying interest with a $20 million buy wall positioned at $0.21.

The buy wall was swiftly withdrawn, resulting in a rapid collapse of liquidity. The POPCAT price plunged, liquidating all open long positions. The Hyperliquid Provider taking over those positions subsequently suffered a $4.9 million loss.

On-chain analyst MLMabc characterized the event as a deliberate attack on Hyperliquid, designed to generate a false impression of demand and trigger a price spike before withdrawing liquidity. The trader’s own positions were wiped out, and their entire $3 million collateral was lost.

The Hyperliquid team manually closed positions and suspended trading while the issues are resolved. This incident echoes a previous manipulation of the JELLYJELLY token in March, highlighting ongoing security and liquidity management needs for the platform.

The cryptocurrency community is raising concerns about increasing manipulation attempts, particularly within the meme coin market, and the resulting risks for decentralized perpetual exchanges.

The situation underscores the need for continued vigilance and improved security protocols within the evolving DeFi landscape.

Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.