POPCAT Flash Crash on Hyperliquid Sparks $4.9 Million Manipulation Allegations
An nameless dealer burned via $3 million in minutes on Hyperliquid after faking a $20 million purchase wall on POPCAT.
The transfer triggered a cascade of liquidations, leading to a $4.9 million loss for the platform’s liquidity supplier. Analysts now suspect a coordinated “stress check” of Hyperliquid’s system.
$30 Million Long Positions Create Chaos
The incident started when an unknown dealer withdrew $3 million USDC from the OKX exchange, splitting it throughout 19 separate wallets earlier than depositing it into Hyperliquid DEX.
Using these accounts, the dealer opened huge lengthy positions on POPCAT, leveraging them roughly 5x. Total publicity reached round $26–30 million, briefly making POPCAT one of the crucial actively traded tokens on the platform.
According to blockchain intelligence agency Arkham, the dealer’s positions have been rapidly liquidated, ensuing within the lack of virtually all collateral.
“Someone simply handed $5 million of unhealthy debt on POPCAT to Hyperliquid’s Hyperliquidity Provider (HLP)…These 19 accounts have been liquidated for a mixed $25.5 million of POPCAT, dropping $2.98 million in collateral,” Arkham reported.
The on-chain tracker additionally revealed that HLP misplaced $4.95 million, a transfer that successfully closed out remaining positions.
Fake Buy Wall Sparks Mass Liquidations
To amplify the chaos, the dealer positioned a $20 million purchase wall at $0.21, creating the phantasm of robust demand. As of this writing, the POPCAT value was buying and selling for $0.12, down by virtually 30% within the final 24 hours.
This strategic transfer attracted different merchants to enter lengthy positions, as they believed in a bullish momentum. Within minutes, the purchase wall vanished, inflicting POPCAT’s value to break down.
The sudden drop triggered mass liquidations throughout the market, with HLP absorbing the brunt of the losses.
“The attacker then positioned an roughly $20 million purchase wall close to $0.21, creating the phantasm of robust demand — solely to cancel the orders, triggering a liquidity collapse that led to mass liquidations. HLP absorbed the positions and misplaced round $4.9M, whereas the attacker’s whole $3M stake was worn out,” blockchain analyst Lookonchain noted.
Stress Test or Deliberate Attack?
Many within the crypto neighborhood suspect this was no accident. Vikas Singh, who noticed the occasion reside, in contrast it to earlier manipulative scenarios, such as JellyJelly 2.0, noting the weird stability of the lengthy wall and its handbook upkeep.
Analysts speculate this might have been a focused stress check to probe Hyperliquid’s automated liquidity techniques.
Some neighborhood members even speculated about Binance’s former CEO CZ’s involvement. However, CZ responded straight, denying any connection.
“I’ve not used every other CEX for 8 years,” the Binance govt articulated.
This marks the third major market incident on Hyperliquid this yr, elevating questions on how the alternate handles liquidity focus and systemic danger. High-leverage meme tokens, equivalent to POPCAT, are inherently risky and will expose vulnerabilities in decentralized liquidity techniques.
Reportedly, the incident additionally sparked a short lived pause on Hyperliquid’s Arbitrum bridge, although deposits and withdrawals continued unaffected.
DeFi analyst Hanzo suggests exchanges may have stricter leverage limits, real-time monitoring instruments, or platform-specific restrictions to mitigate comparable assaults sooner or later.
While Hyperliquid’s workforce manually stabilized the market, the incident exposes the fragility of automated liquidity mechanisms in high-leverage meme markets.
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