Hyperliquid News Today: Hyperliquid's $4.9 Million Loss Highlights DeFi's Ongoing Challenges with Risk Management

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Hyperliquid News Today: Hyperliquid's $4.9 Million Loss Highlights DeFi's Ongoing Challenges with Risk Management

Bitget-RWA2025/11/13 01:32

By:Bitget-RWA

- Hyperliquid paused its Arbitrum bridge after a $4.9M loss from a POPCAT meme coin price manipulation scheme, as reported by Coinotag. - A trader used $3M in stablecoins to artificially inflate POPCAT's price, triggering liquidations and exposing DeFi's risks in volatile assets. - The incident mirrors a 2025 JELLYJELLY manipulation case, with experts criticizing Hyperliquid's immaturity in balancing decentralization and risk controls. - Analysts urge stronger safeguards for community-funded pools, as plat

Hyperliquid, a decentralized platform for perpetual futures trading, temporarily suspended its

Arbitrum

bridge on Wednesday following a suspected price manipulation incident involving the Solana-based

meme

token POPCAT, which resulted in a $4.9 million loss from its community vault, according to a

Coinotag report

. This event has renewed debates about the dangers of leveraged trading within decentralized finance (DeFi), especially when it comes to highly volatile meme coins.

On-chain investigators revealed that a user—known as MLMabc on X—used $3 million in stablecoins to establish a $20 million long position on POPCAT across 19 different wallets. The trader placed significant buy orders at $0.21 per coin to artificially boost demand, forming a "buy wall." Once this wall was suddenly withdrawn, POPCAT's price plummeted, leading to the rapid liquidation of the $20–30 million position. Hyperliquid's liquidity provider (HLP) had to assume the position to meet its obligations, which led to the substantial loss, as detailed in a

TradingView post

Hyperliquid News Today: Hyperliquid's $4.9 Million Loss Highlights DeFi's Ongoing Challenges with Risk Management image 0

Hyperliquid triggered its EmergencyLock feature to stop

USDC

transactions through the Arbitrum bridge, blocking further exploitation, as

Coinotag reported

. The exchange resumed normal operations within a few hours, with no major disruptions to the broader blockchain, according to

Decrypt reported

. A Discord administrator for Hyperliquid clarified that the suspension only affected the Arbitrum bridge, and all other deposit and withdrawal methods continued as usual.

This situation is reminiscent of an event in March 2025, when a trader manipulated the

Solana

meme token JELLYJELLY, causing the HLP vault to incur about $12 million in unrealized losses, as

TradingView reported

. Incidents like these have sparked criticism regarding Hyperliquid's capacity to balance decentralization with effective risk controls. Steven Zheng, research director at The Block, commented that the pause highlights Hyperliquid's relative lack of maturity compared to centralized exchanges, stating, "Although the platform aspires to be a leading decentralized perpetual exchange, it still has a long way to go," as

The Block reported

POPCAT, which has a market value of $136 million, had increased by 5.6% in the 24 hours before the incident but was still down 91% over the past year, according to

Coinotag

. Experts pointed out that the extreme volatility of meme coins heightens the risk of liquidations in leveraged trading. Zheng from The Block added that platforms like Hyperliquid need to implement stronger protections to avoid "cascading failures" in community-backed pools, as

TradingView reported

Hyperliquid has not issued a public statement detailing the exact cause of the loss but did confirm that the vault was impacted by liquidations. The exchange's status page showed no ongoing problems as of late Wednesday, as

Decrypt reported

. Meanwhile, the trader responsible for the POPCAT manipulation described their actions as a "deliberate attempt to mess" with Hyperliquid and its vault, though the exchange has not responded to this claim, as

PanewsLab reported

This episode highlights the broader challenges within DeFi, where liquidity pools managed by the community are exposed to unique risks. As platforms broaden their offerings to include more speculative assets, industry experts recommend stricter position limits and improved oversight to reduce vulnerabilities. For now, Hyperliquid's quick move to isolate the compromised bridge reflects standard procedures for containing potential systemic threats, according to blockchain security analysts, as

Coinotag reported

---

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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