Decentralized derivatives platform Hyperliquid suffered a $4.9 million loss on Wednesday after carefully orchestrated manipulation of the POPCAT token, according to data shared by blockchain detective Lookonchain.
The attacker withdrew $3 million in USDC from centralized exchange OKX, spreading it across 19 wallets to create a massive leveraged long position valued at between $20 million and $30 million in POPCAT.
The attacker then placed a $20 million buy order near $0.21, attracting liquidity and driving up prices. Once the position was sufficiently inflated, the attacker abruptly withdrew buy orders, causing POPCAT prices to collapse, which led to cascading liquidations of leveraged positions, including the attacker’s own $3 million collateral, which disappeared within seconds.
Hyperliquid’s Community Liquidity Vault (HLP), which acts as a safety net for liquidations, had to absorb remaining losses after collateral was exhausted, leading to a $4.9 million bad debt, worsening the impact on the leading perpetual focus decentralized exchange.
CoinDesk has contacted Hyperliquid for comment via X.
One market participant described this episode as “maximum degenerative warfare.”
“Someone burned down 3M just to destroy liquidity and drag HLP into a 5 million loss. Classic illusion of fabricated demand followed by a flush. Nothing magic here. Just an attacker exploiting LP’s shallow depth and automated absorption,” the participant on X said.
