Decentralized derivatives platform Hyperliquid suffered a loss of $4.9 million on Wednesday following a carefully orchestrated manipulation of the POPCAT token, according to data shared by blockchain practitioner Lookonchain.
The attacker withdrew $3 million in USDC from the centralized exchange OKX and split 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, which drew in liquidity and pushed prices up. When the position was sufficiently inflated, the attacker suddenly pulled the buy orders, causing a crash in POPCAT prices, leading to cascading liquidations of leveraged positions, including the attacker’s own $3 million collateral, which was gone in seconds.
Hyperliquid’s community-owned liquidity pool (HLP), which acts as a safety net for liquidations, had to absorb the remaining losses after the collateral was exhausted, leading to bad debt of $4.9 million, exacerbating the impact on the leading ever-focused decentralized exchange.
CoinDesk contacted Hyperliquid for comment via X.
One market participant described the episode as “peak degen warfare.”
“Someone burned 3M just to nuke liquidity and drag HLP into a 5M loss. Classic manufactured demand illusion followed by a flush. Nothing magical here. Just an attacker exploiting thin depth and automated LP absorption,” said participant on X.
