Hyperliquid Labs addresses reports of North Korean-linked activity on its protocol

Hyperliquid, a leading on-chain perpetual futures exchange, faced scrutiny after allegations emerged of North Korean-linked wallet activity on its platform.

Security expert Taylor Monahan of MetaMask reported that wallets connected to North Korean hackers had traded ETH on Hyperliquid, resulting in over $700,000 in liquidations.

“DPRK doesn’t trade. DPRK tests,” Monahan posted on X, suggesting the wallets were potentially probing for platform vulnerabilities.

The allegations triggered significant user withdrawals, with data from Hashed’s Dune Analytics dashboard showing more than $194 million in USDC withdrawn on Monday.

Hyperliquid Labs rejected the claims through statements on their Discord channel.

“Hyperliquid Labs is aware of reports circulating regarding activity by supposed DPRK addresses,” the team stated. “There has been no DPRK exploit — or any exploit for that matter — of Hyperliquid. All user funds are accounted for.”

The platform emphasized its strong operational security measures, including a generous bug bounty program and adherence to best practices in blockchain analytics.

Hyperliquid Labs also addressed claims of unprofessional interactions with an external security advisor, stating that the individual behaved unprofessionally, prompting the team to consult trusted partners instead.

After Hyperliquid Labs addressed the situation, the market reaction began to stabilize.

The controversy sparked significant selling of Hyperliquid’s native token, HYPE, which dropped over 25% from a high of $34 on Sunday to a low of $25 on Monday.

However, the token has since rebounded and is currently trading at $27, according to DexScreener data.

Hyperliquid remains a major player in decentralized finance, commanding over 55% of on-chain perpetual futures trading volume, according to data from user uwusanauwu’s Dune dashboard.