Hyperliquid has established itself as the leading platform in the booming sector of decentralized perpetual contracts. This position clearly exposes it to malicious acts, as in the recent case of POPCAT token manipulation, which resulted in an irrecoverable debt of $4.9 million.
Hyperliquid victim of a POPCAT token attack
In the constantly evolving landscape of decentralized exchanges (DEXs), Hyperliquid has established itself as the flagship of the perpetual contracts sector. This position has stirred up controversy, as in the fierce competition triggered by the selection of the issuer of its native stablecoin USDH, officially available since the end of September.
At the same time, its high volumes are attracting malicious actors. One need only recall the case of manipulation of its pre-market dedicated to XPL tokens on the Plasma blockchain last August, which netted those responsible $46 million, accompanied by a simultaneous liquidation of $17 million.
This scenario seems to be inspiring others, if we are to believe the recent publication by the Lookonchain account on the X network about an attack against Hyperliquid using manipulation of the POPCAT token.
A meticulously planned operation carried out using a $3 million investment in USDC stablecoins, transferred from the OKX platform. The goal? To artificially inflate the price of the POPCAT token in order to trigger a cascade of liquidations. Clearly, it worked very well…
An irrecoverable debt of $4.9 million
In fact, the person responsible for what appears to be a targeted attack meticulously distributed their funds across 19 separate wallets in order to open leveraged long positions involving a colossal total of almost $30 million on the POPCAT token.
Once this first step was completed, they then placed a $20 million buy order at a price of around $0.21 to simulate high demand in order to attract more liquidity and drive up prices. That’s when everything changed.
In fact, this trader with malicious intentions then hastily withdrew his buy order, immediately causing the price of the POPCAT token to collapse. In the wake of this, the decline led to a series of cascading liquidations of leveraged positions, including his $3 million, which evaporated at the same time.
Why decide to lose such a large sum? Perhaps because the damage inflicted on the Hyperliquid platform appears to be much greater. The main consequence of this operation is an estimated $4.9 million in unrecoverable debt for its Hyperliquidity Provider (HLP), a community vault designed to provide liquidity to its exchange.
