Hyperliquid Loses $4M as Ethereum Whale Deliberately Pulls Collateral

Hyperliquid faces a $4M loss, exposing its vulnerability after an Ethereum whale pulled out collateral. Get to know what really happened.
By Pooja Khardia
Updated: 13 Mar, 2025 | 11:58:56 AM GMT
Hyperliquid Loses $4M as Ethereum Whale Deliberately Pulls Collateral

Highlights

  • A single Ethereum whale caused a $4M loss for Hyperliquid by strategically withdrawing collateral and forcing liquidation.
  • Speculation abounds over whether this was an insider attack or a coordinated move by centralized exchanges.
  • HYPE price crashed 9% with this Hyperliquid drama and investors' concern over the platform's vulnerability.

The unpredictability of the crypto market hit the famous decentralized perpetual exchange Hyperliquid, as a single Ethereum whale created a $4 million loss for the platform. The news itself is shocking, as the community speculated an insider. Still, some speculated that the crypto market mafias are taking over, claiming that the competing centralized exchanges (CEX) may have a hand in this. What’s happening? Let’s discuss this.

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How did Hyperliquid lose $4M?

The incident began with an Ethereum whale opening a long position on ETH, established to be worth $285M, backed by only $14M in collateral. In the trading market, these long or short positions have a liquidation level. If the market moves against the price position, they get closed forcefully on this point.

Interestingly, the whale made smart decisions and strategically withdrew collateral over time, lowering the margin and forcing HLP to liquidate positions. On-chain data reveals that the earlier liquidation level was $1,800, but the collateral pulling pushed it to $1,930.

When the Ethereum price surged and hit this mark, the position got liquidated, transferring all the bad debt directly to Hyperliquid’s liquidity pool (HLP). Interestingly, the Ethereum whale had this calculated, and they hedged by shorting ETH on another exchange, making profits. As a result, the platform had to bear all this loss while the Ethereum whale walked with a $1.2M profit.

Hyperliquid Provider HLP

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Hyperliquid Insider Attack or Bigger Conspiracy at Play?

The incident has sparked speculation, where some initially attributed insider or North Korean hackers to this activity. However, Hyperliquid team’s announcement has ruled out that possibility, as they said:

To be clear: There was no protocol exploit or hack.”

The platform explained that the whale had unrealized profit, whose withdrawal resulted in the lowered margin and the liquidation. Interestingly, despite the $4M loss, the team revealed that HPL’s all-time remains at $60M before warning that it is not a risk-free strategy.

Hyperliquid

As the hack or insider speculation is out of the picture, the focus has shifted to centralized exchanges. Some experts allegedly claimed this mega whale liquidation could be a CEX attack to undermine Hyperliquid as it’s their competitor.

One blames Binance and its former CEO Changpeng Zhao, claiming they acquired intel with Chinese logs. More importantly, they allegedly connected it to the CZ vs SBF mishap, arguing that the community may see a similar CEX Vs. DEX fight. Another added that this smells of 2021, which led to the Sam Bankman and FTX’s downfall.

Centralized exchange
Experts believe HPL’s struggles could impact its image and investors’ confidence. More importantly, decentralized exchange’s downfall could benefit the centralized crypto platform. However, this is just a speculation and doesn’t have any proof or basis.

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What This Means for HYPE Price and the Crypto Market?

This event has exposed a potential vulnerability in Hyperliquid’s risk management system. Investors’ concern, as this reveals that people can withdraw their collateral even in the active trade.

This event has also significantly affected the HYPE price, as it crashed 9% after this news. Although it has recovered somewhat from the dip of $12.75, currently trading at $12.2, the risk of a crash further persists as the investors’ sentiments turn fearful.

HYPE price

It also impacts the platform’s images and experts’ concerns that this CEX Vs. DEX battle will get nasty, affecting the entire market, especially by breaking investors’ trust in decentralized platforms.

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Frequently Asked Questions (FAQs)

1. How did Hyperliquid lose $4M?

Hyperliquid is bearing a $4M loss after an Ethereum whale deliberately pulled out collateral, putting the bad debt on exchange.

2. Was Hyperliquid hacked or exploited?

No, Hyerliquid confirmed there was no exploitation or hack. Instead, they claimed that the whale's unrealized profit withdrawal led to this liquidation.

3. What’s the alleged speculation about centralized exchanges behind this attack?

Some experts alleged that competing centralized exchanges may have orchestrated this event to undermine Hyperliquid, but there's no concrete proof.
Pooja Khardia
Pooja Khardia is a seasoned crypto content writer with 6+ years of experience in writing, including in blockchain, cryptocurrency, DeFi, and digital finance reporting. In her adventure journey, she is currently working with CoinGape Media and leading their Trending Section. Here, she uses her expertise to deliver analytics, market insights, price predictions, and information on what’s trending in the crypto space, aiming to keep the crypto and web3 community updated with market trends and important insights. Known for a user-centric and straightforward writing style, Pooja is passionate about making crypto easy and accessible. Her writing blends market research with storytelling, helping readers stay ahead in a fast-paced industry. When not behind the keyboard, Pooja embraces her creative side through drawing and crafting. Connect with Pooja on LinkedIn or X.
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