Hyperliquid Whale's $15 Million Bet Leads to Massive Liquidation 'Tears of Blood'

▲ Cardano (ADA)

A whale's reckless attempt at price manipulation, exploiting the flimsy liquidity of the virtual asset market, ended in the tragedy of a massive liquidation totaling $3 million.

On April 9 (local time), crypto media outlet Cointelegraph spotlighted suspicious trading activity involving FARTCOIN on the decentralized exchange Hyperliquid. According to on-chain analytics firms PeckShield and Lookonchain, four wallets, believed to belong to a single entity, caused a total of $3.02 million in positions to be forcibly liquidated during the process of driving up the price of FARTCOIN and then triggering a rapid price fluctuation.

The attacker reportedly used four new wallets to establish a FARTCOIN long position worth approximately $15 million and accumulated 145.24 million FARTCOIN. Subsequently, exploiting low market liquidity, they intentionally surged the price by 27%, but then could not withstand the immediate 30% price crash that followed, leading to a suicidal liquidation scenario where the entire position was liquidated.

The core of this incident was the activation of Hyperliquid's ADL (Auto-Deleveraging) mechanism. When a large volume of liquidation could not be absorbed by the market, the Hyperliquid system transferred the toxic positions to the HLP (Hyperliquid Liquidity Provider) pool, incurring a loss of $1.5 million. In this process, some investors holding opposing positions were forcibly deleveraged, fixing their profits.

Conversely, certain short position wallets that had bet on a decline were found to have gained approximately $849,000 through this ADL process. The analysis group Evening Trader Group diagnosed, "Although the book loss is $3.02 million, it is highly likely to be part of sophisticated market manipulation aimed at real arbitrage through cross-hedging using multiple platforms." The fact that the four wallets moved USDC simultaneously and all liquidation procedures were completed within 3 hours supports this claim.

Hyperliquid confirmed that there were no issues with the protocol's stability due to this incident but plans to re-examine its risk management system for low-liquidity assets. Experts diagnose this case as a typical example of psychological warfare and manipulation attempts by whales that can occur in virtual asset markets with insufficient trading volume. The virtual asset industry is raising concerns about opaque trading practices on decentralized finance platforms that are in regulatory blind spots.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*