Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnSquareMore
Hyperliquid Trader Offloads $4M Loss onto HLP Vault, Igniting Discussions on Systemic Risk

Hyperliquid Trader Offloads $4M Loss onto HLP Vault, Igniting Discussions on Systemic Risk

Bitget-RWA2025/09/25 09:08
By:Coin World

- Hyperliquid trader "0xf3f4" triggered a $4M HLP Vault loss via ETH liquidation, exploiting margin withdrawals to shift risks to the platform's liquidity buffer. - The incident exposed systemic risks in DeFi leverage trading, prompting Hyperliquid to reduce BTC/ETH max leverage to 40x/25x to prevent cascading losses. - High-profile traders like "0xa523" (40x leveraged $40M loss) and James Wynn (recurring high-risk bets) highlight vulnerabilities in leveraged strategies and platform safeguards. - Critics a

Hyperliquid Trader Offloads $4M Loss onto HLP Vault, Igniting Discussions on Systemic Risk image 0

A prominent trader known as "0xa523" has left Hyperliquid after suffering a staggering $40 million loss, overtaking the previous record set by James Wynn, who lost $23.6 million. The majority of these losses resulted from aggressive leveraged trades, most notably a $39.66 million setback on Hyperliquid’s HYPE token, where 886,287 tokens were sold just before the price recovered. Additional losses were recorded on Ether (ETH) and

(BTC) trades, with the wallet currently exposed to $152 million in leveraged positions at 28.69x leverage and a margin usage of 114.74% Whale 0xa523 Tops James Wynn With $40M Hyperliquid Loss [ 1 ].

Another major event involved the forced closure of a $306.85 million

position held by wallet "0xf3f4," which led to a $4 million hit for Hyperliquid’s HLP Vault—a reserve fund meant to cushion such shocks. The trader had initially deposited $15.23 million in to open the position but later withdrew $17.09 million, lowering the margin and triggering a liquidation. Despite the vault’s loss, the trader walked away with a $1.86 million gain, while the HLP Vault absorbed most of the loss Hyperliquid’s $4M Liquidation Loss Raises Manipulation Fears [ 2 ]. In response, Hyperliquid reduced the maximum allowable leverage for and ETH trades to 40x and 25x, respectively, aiming to reduce systemic risk Hyperliquid loses $4M after whale’s ETH trade liquidation [ 3 ].

James Wynn, who previously held the record for the largest loss on the platform, has also come under scrutiny. After a $100 million BTC position was liquidated in July, Wynn returned with more high-risk trades, including a 40x leveraged long on BTC and a 10x long on

. His trading record demonstrates the dangers of high-leverage strategies, with some critics arguing these positions are especially susceptible to market manipulation Whale 0xa523 Tops James Wynn With $40M Hyperliquid Loss [ 1 ]. Meanwhile, influencer Andrew Tate has lost $726,000 on Hyperliquid, which includes a $67,500 liquidation on the token Whale 0xa523 Tops James Wynn With $40M Hyperliquid Loss [ 1 ].

The forced liquidation of the 0xf3f4 ETH position has fueled discussions about possible market manipulation. Observers noted that the trader’s tactic of withdrawing margin to prompt liquidation at higher prices shifted losses onto the HLP Vault. This approach, known as liquidation arbitrage, has been seen in previous DeFi incidents. Market depth analysis by EmberCN indicated that Hyperliquid’s liquidation mechanism struggled to close the position without worsening the price drop Hyperliquid’s $4M Liquidation Loss Raises Manipulation Fears [ 2 ].

Following the event, Hyperliquid’s HYPE token initially fell by 11% but later recovered to $13.02. The HLP Vault still holds a net profit of $60 million, though the recent $4 million loss accounts for 6.6% of its total historical gains. Some critics argue that simply lowering leverage and adjusting margin requirements may not be enough to eliminate systemic risk, especially since high-leverage trading continues to attract illicit activity. Blockchain analysts have traced certain Hyperliquid trades to phishing operations and North Korean hackers, raising alarms about potential money laundering Hyperliquid’s $4M Liquidation Loss Raises Manipulation Fears [ 2 ].

This episode highlights the dangers present in decentralized exchanges (DEXs), where high-leverage trades and automated liquidations can magnify losses for both individual traders and liquidity providers. As Hyperliquid works to address these issues, the wider crypto community remains vigilant, particularly as Ethereum’s price movement and ETH’s surge above $2,000 come under increased observation Hyperliquid’s $4M Liquidation Loss Raises Manipulation Fears [ 2 ].

0

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.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

DOJ Shuts Down North Korea’s Cyber-Backed Weapons Financing Network

- U.S. DOJ disrupts North Korean cybercrime network infiltrating 136 U.S. firms via fake IT workers, generating $2.2 million in illicit revenue for Pyongyang's weapons programs. - Five individuals, including U.S. citizens and a Ukrainian national, pleaded guilty to enabling APT38's operations through stolen identities and proxy computers hosted in U.S. residences. - DOJ seized $15 million in USDT linked to 2023 crypto heists by APT38, which has stolen over $2 billion globally in 2025 alone, according to El

Bitget-RWA2025/11/16 14:14
DOJ Shuts Down North Korea’s Cyber-Backed Weapons Financing Network

Trump’s decision to pardon Lewis suggests a softer stance toward high-profile white-collar offenses

- Trump pardons British billionaire Joe Lewis, allowing him to return to the U.S. after a 2024 insider trading conviction. - Lewis, 88, avoided jail due to health but faces $5M in fines; his family expressed gratitude for reuniting with relatives in Florida. - The pardon aligns with Trump's pattern of leniency toward high-profile figures, sparking debates over corporate white-collar crime policies. - Lewis's family trust confirms no changes to Tottenham Hotspur's governance, maintaining Vivienne Lewis's op

Bitget-RWA2025/11/16 13:56
Trump’s decision to pardon Lewis suggests a softer stance toward high-profile white-collar offenses

Bitcoin News Update: Major Crypto Money Laundering Case Highlights Worldwide Battle Against Digital Financial Crimes

- Qian Zhimin, 47, was sentenced to 11 years for orchestrating a $5.6B crypto Ponzi scheme affecting 128,000 Chinese victims. - UK authorities seized 61,000 BTC ($6B) during the case, the largest cryptocurrency seizure in UK history. - Qian fled China in 2017, lived lavishly in the UK for seven years using forged documents before her 2021 arrest. - The case highlights cross-border crypto crime challenges, with global authorities recovering assets linked to Chinese cyberattacks. - Prosecutors face hurdles i

Bitget-RWA2025/11/16 12:44
Bitcoin News Update: Major Crypto Money Laundering Case Highlights Worldwide Battle Against Digital Financial Crimes

Shutdown-Related Data Shortfalls Lead Fed to Delay Reducing Rates

- U.S. government shutdown ended Nov 12, 2025, but left critical economic data gaps for Fed's December rate decision. - 1.4 million furloughed workers and $11B lost output highlight shutdown's severe economic impact despite mixed private-sector data. - Fed faces delayed/missing jobs reports and CPI data, increasing likelihood of rate cut pause as policymakers emphasize data caution. - Market expectations shifted from 95.5% to 53.6% chance of December cut, reflecting demand for evidence-based monetary polic

Bitget-RWA2025/11/16 12:44
Shutdown-Related Data Shortfalls Lead Fed to Delay Reducing Rates