Hyperliquid Whale Suffers 'Bloody Tears' from Massive $15 Million Bet Liquidation

▲ Cardano (ADA)

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

Cryptocurrency media outlet Cointelegraph, in its report on April 9 (local time), highlighted suspicious trading activity involving FARTCOIN on the decentralized exchange Hyperliquid. According to on-chain analytics firms PeckShield and Lookonchain, a total of $3.02 million worth of positions were forcibly liquidated during a process where four wallets, presumed to belong to a single entity, pushed up the price of FARTCOIN and then caused rapid price fluctuations.

The attacker reportedly used four new wallets to build a FARTCOIN long position worth approximately $15 million, accumulating 145.24 million FARTCOIN. Subsequently, exploiting low market liquidity, they deliberately surged the price by 27%, but could not withstand the immediate 30% price crash that followed, leading to a self-inflicted liquidation scenario where the entire position was wiped out.

The core of this incident was the activation of Hyperliquid's ADL (Auto-Deleveraging) mechanism. When the large liquidation volume 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, resulting in their profits being realized.

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

Hyperliquid confirmed that there were no issues with the protocol's stability due to this incident but plans to re-evaluate its risk management system for low-liquidity assets. Experts diagnosed this case as a prime example of typical whale-on-whale psychological warfare and manipulation attempts that can occur in virtual asset markets with insufficient trading volume. The virtual asset industry is raising its voice in caution against opaque trading activities on decentralized finance platforms, which are often in regulatory blind spots.

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