Hyperliquid has established itself as the leading platform in the rapidly growing sector of decentralized perpetual contracts. This position clearly exposes it to malicious acts, as in the recent case of manipulation involving the POPCAT token, which resulted in an unrecoverable debt of $4.9 million.
Hyperliquid Falls Victim to a POPCAT Token Attack
In the ever-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 seen in the fierce competition triggered by the selection of the issuer for its native stablecoin, USDH, which has been officially available since late September.
At the same time, its high trading volumes attract malicious actors. One need only recall the case of manipulation in its pre-market for XPL tokens on the Plasma blockchain last August, which resulted in a $46 million profit for those responsible, accompanied by a simultaneous liquidation of $17 million.
A scenario that appears to be inspiring others, if the recent post by the Lookonchain account on the X network is to be believed—regarding an attack carried out against Hyperliquid through 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 subsequently trigger a cascade of liquidations. Clearly, it worked very well…
An unrecoverable debt of $4.9 million
In fact, the perpetrator of what appears to be a targeted attack meticulously distributed their funds across 19 separate wallets to open leveraged long positions totaling a staggering nearly $30 million in the POPCAT token.
Once this first step was complete, the perpetrator then placed a buy order for $20 million at a price of around $0.21 to simulate high demand, attract more liquidity, and drive up prices. That’s when everything went south.
Details of open positions on the POPCAT token
In fact, this malicious trader then hastily withdrew his buy order, immediately causing the price of the POPCAT token to plummet. In the wake of this, the price drop triggered a series of cascading liquidations of leveraged positions, including his $3 million, which vanished at the same time.
Why would someone choose to lose such a large sum? Perhaps because the damage inflicted on the Hyperliquid platform appears to be far greater. The main consequence of this operation is an estimated $4.9 million in uncollectible debt for its Hyperliquidity Provider (HLP), a community vault designed to provide liquidity to its exchange.
