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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 ].

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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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