Decentralized derivatives platform Hyperliquid suffered a $4.9 million loss on Wednesday after a carefully orchestrated manipulation of the POPCAT token, according to data shared by blockchain sleuth Lookonchain.
The attacker withdrew $3 million worth of USDC from the OKX centralized exchange, splitting it across 19 wallets to create a massive leveraged long position worth 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 drop, leading to cascading liquidations of leveraged positions, including the attacker’s own $3 million collateral, which disappeared within seconds.
Hyperliquid’s community-owned liquidity vault, which acts as a safety net for liquidations, had to absorb remaining losses after collateral ran out, resulting in bad debt of $4.9 million, deepening the impact on the leading perpetuity-focused decentralized exchange.
CoinDesk has reached out to Hyperliquid for comment via X.
One market participant described the episode as “the peak of the degenerative war.”
“Someone burned 3M just to destroy liquidity and drag HLP into a 5 million loss. Classic illusion of fabricated demand followed by a flush. Nothing magical here. Just an attacker exploiting LP’s shallow depth and automated takeover,” the X participant said.
