Hyperliquid faced one of its most chaotic days to date after an unidentified trader executed a coordinated market move that destabilized the exchange’s POPCAT-linked perpetual markets and inflicted a multimillion-dollar blow to its liquidity vault.
The incident unfolded rapidly, driving an unexpected liquidation cascade and leaving the platform’s hyperliquidity provider vault with nearly $5 million in losses.
How the Unraveling Began
According to data reconstructed by blockchain analysts, the chain of events began long before the market collapse. An unknown actor quietly withdrew $3 million worth of USDC from OKX, distributing it across a cluster of newly created wallets. Those wallets later converged on Hyperliquid, where the attacker opened more than $26 million in leveraged long positions tied to HYPE, the exchange’s POPCAT-denominated perpetual market.
After establishing the oversized exposure, the trader placed an enormous buy wall around $0.21 — a classic tactic used to manufacture perceived strength. The wall was short-lived. Once it vanished, liquidity evaporated with it, leaving an empty price floor. That move instantly shoved dozens of leveraged traders into liquidation, pushing losses directly into Hyperliquid’s automated HLP vault.
Someone just manipulated $POPCAT to attack #Hyperliquid, burning through $3M of their own funds — and causing $4.9M in losses for the Hyperliquidity Provider (HLP).
The attacker withdrew 3M $USDC from #OKX yesterday, split it across 19 wallets, and deposited it into #Hyperliquid… pic.twitter.com/lnwsRSspFv
— Lookonchain (@lookonchain) November 13, 2025
One of the Exchange’s Largest Single-Day Loss Events
By the time the dust settled, the vault showed roughly $4.9 million in damage — a rare and severe loss for Hyperliquid. What stunned analysts was that the instigator made no effort to profit from the chaos. The entire $3 million in capital they used was erased in the process.
Instead of profit-seeking manipulation, the attack resembled a deliberate attempt to stress-test or outright wound the exchange’s liquidity mechanisms. Analysts described it as a trader intentionally torching their own money to exploit the architecture of an on-chain perps venue.
A Different Breed of Manipulation
The incident sparked a flurry of speculation across the crypto community. One observer suggested the attacker may have been hedged elsewhere, effectively absorbing losses on-chain while profiting off-chain. Others dismissed it entirely as irrational, calling it one of the “most expensive experiments ever conducted” in DeFi.
Another community member framed it as a bizarre form of crypto performance art — a multimillion-dollar dramatization of how fragile liquidity structures can be when a determined actor collapses artificial support. The phrase “only in crypto do villains burn millions for the plot” circulated widely.
Many traders pointed out that the whole episode underscores a long-known reality: perpetual futures markets without robust liquidity buffers are vulnerable to anyone willing to set money on fire to move them.
Emergency Response and Temporary Withdrawal Freeze
As tension built, Hyperliquid users began noticing that withdrawals suddenly stopped processing. Developers later confirmed that the team had activated an emergency lock on the bridge contract — a defensive maneuver typically used when suspicious activity is detected.
Roughly an hour later, the pause was lifted and withdrawals resumed. While the team did not publicly confirm whether the freeze was directly tied to the POPCAT incident, the timing led many to assume it was, at minimum, a precaution taken while the platform assessed wider risks.
Aftermath and Unanswered Questions
The episode has already entered Hyperliquid lore as one of the most dramatic liquidity shocks in its history. It raised new questions about whether the exchange will introduce stronger safeguards to prevent similar manipulations, or whether the event will stand as an unavoidable consequence of open, automated liquidity systems.
For now, the identity of the attacker and their true motives remain a mystery — but the impact of their actions will likely shape Hyperliquid’s risk controls for months to come.
The information provided in this article is for educational purposes only and does not constitute financial, investment, or trading advice. Coindoo.com does not endorse or recommend any specific investment strategy or cryptocurrency. Always conduct your own research and consult with a licensed financial advisor before making any investment decisions.
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/mystery-trader-burns-millions-to-break-hyperliquids-system/