Wednesday night, the decentralized platform Hyperliquid briefly halted withdrawals after a series of suspicious transactions related to the memecoin Popcat (POPCAT). In a matter of hours, nearly $5 million was lost by the HLP, the community vault of the exchange, falling victim to a domino effect caused by an anonymous trader.
Attack on Popcat at Hyperliquid: an orchestrated maneuver from 19 wallets
It all started when an individual withdrew 3 million USDC from the OKX exchange before distributing them to 19 separate wallets. The goal was to open massive long positions on Popcat via Hyperliquid, with a total estimated exposure between 26 and 30 million dollars. Minutes later, the scenario turned into a disaster. Popcat plummeted, leading to the instantaneous liquidation of the 19 accounts. According to Arkham Intelligence, the operation resulted in $25.5 million in forced positions, while the HLP of Hyperliquid, receiving the remaining long positions, incurred a net deficit of 4.95 million. Hyperliquid then manually closed the remaining positions to stabilize the situation.
The Phantom “Buy Wall” Trap
The trader exacerbated the panic by placing a fake buy wall of $20 million at $0.21, simulating strong market demand. Seduced by this bullish illusion, several users opened long positions… just before the wall disappeared. In seconds, Popcat dropped by nearly 30%, reaching around $0.12, triggering a cascade of liquidations. The community vault bore the brunt of the losses, while the trader behind the operation saw his 3 million USDC vanish completely.
A Flaw in the Liquidity Model?
On Discord, Hyperliquid administrators confirmed that the Arbitrum bridge had been temporarily suspended to secure the flows. Deposits and withdrawals on other networks were not affected. This attack follows several similar incidents, including that of the JellyJelly token, already accused of weakening the protocol structure. Some community members see it as a deliberate “stress test” to challenge the platform’s automatic liquidity system.
CZ and the Rumors of Interference
Users quickly insinuated that Changpeng Zhao (CZ), former Binance CEO, could be involved. He bluntly replied, “I haven’t used another CEX for eight years.” A clear way to dismiss the rumors. Nonetheless, the incident reignites the debate on the resilience of DEXs against market manipulation, especially with high-leverage tokens. Analysts now advocate for stricter leverage limits and real-time monitoring of liquidations to prevent such attacks from recurring.
A Warning for the Entire DeFi Ecosystem
With three major incidents since the beginning of the year, Hyperliquid is under pressure. While the team managed to manually stabilize the market, the event highlights the structural fragility of automated liquidity systems when faced with highly volatile tokens. Popcat, with a current market cap of around $136 million, has been the catalyst for a true shockwave in the DeFi universe. A stark reminder: in decentralized markets, transparency does not prevent manipulation.
