Hyperliquid, a popular crypto trading platform, just faced a major exploit attempt.
But instead of making off with millions, he may have ended up holding the short end of the stick. Let’s discover more about this important issue from Hyperliquid.
Within five minutes, the trader deposited $7.167 million across three separate Hyperliquid accounts. He then placed large leveraged bets on an obscure and illiquid token, JELLYJELLY. Two of his accounts went long—one with a $2.15 million position and another with $1.9 million. Meanwhile, the third account took a massive $4.1 million short position, seemingly to offset the longs.
The plan? Inflate JELLYJELLY’s price, forcing the short position into liquidation. Once the short was too large for normal liquidation, it got passed to Hyperliquid’s Liquidity Provider Vault (HLP), which handles risk in extreme situations. At the same time, the attacker started pulling collateral from his long accounts while their profit-and-loss (PnL) showed massive gains due to the artificial price pump.
While things seemed to be going smoothly at first, Hyperliquid caught on. At 12:50 UTC, the platform restricted the attacker’s accounts, preventing him from making further withdrawals. He had managed to pull out $6.26 million, but his remaining balance of roughly $900K was frozen.
To salvage the situation, the trader pivoted—selling off his JELLYJELLY holdings on his primary account. But Hyperliquid had the last laugh. The exchange shut down JELLYJELLY trading at 0.0095, the exact price at which the third account had shorted the token. This wiped out all unrealized PnL from the first two accounts, leaving the exploiter with no further gains to withdraw.
At the end of the day, the trader deposited $7.17 million but could only withdraw $6.26 million. If he somehow gains access to his frozen funds, he’ll walk away with just a $4,000 loss—chump change for such a high-risk operation. But if Hyperliquid keeps his funds locked, he’ll be staring at a nearly $1 million loss.
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers, and their risk tolerance may differ from yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments, so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
Casper Network is betting big on EVM support, AI payments, and quantum-safe blockchain infrastructure with its new multi-year roadmap.
Microsoft's bet on Space and Time is starting to pay off with the launch of Dreamspace, a no code app builder
Worldcoin's World ID is now live and updated. It's out to prove you are human when on the web instead of dealing with a bot.
Hyperliquid just got exploited. What happened? A trader deposited $7.167M on 3 separate Hyperliquid accounts within 5 minutes of each other. He then made leveraged trades on an illiquid coin, JELLYJELLY. However, he ended up losing money, and is down almost $1M unless Show more
Hyperliquid eventually closed the JELLYJELLY market at 0.0095, the price at which the third account had entered its short trades. This zeroed out all floating PnL on the first two exploiter accounts.
