Crypto Whale's $332M Short Position Revealed as Cybercrime Scheme

A crypto whale, known for placing a massive short position on Bitcoin, has been identified as a cybercriminal using stolen funds for high-leverage trading. The revelation came from on-chain investigator ZachXBT, who highlighted the irony of the crypto community speculating about the "Hyperliquid whale" while the trader was actually gambling with illicit funds.

ZachXBT's comments followed a failed attempt by a group of traders, led by pseudonymous CBB, to hunt the whale. According to data tracked by Lookonchain, the whale opened a 40x leveraged short position of 3,940 BTC at $84,040 on March 15, worth over $332 million, with a liquidation point set at $85,300. The position would face liquidation if Bitcoin’s price exceeded this threshold.

The action quickly gained attention. Just 24 hours later, pseudonymous trader CBB issued a public call for crypto traders to coordinate a short squeeze, targeting the whale’s liquidation price. The group managed to drive Bitcoin above $84,690, nearly reaching the liquidation threshold. Faced with the threat, the whale added $5 million in USDC to increase margin and avoid liquidation. Despite the traders’ efforts, the whale continued to expand the short position, rendering the hunt ultimately fruitless.

The trader, known as the "Hyperliquid 50x leverage whale," had been the subject of intense speculation and scrutiny within the crypto community. The whale's aggressive short positions on Bitcoin, Ethereum, and other cryptocurrencies had left traders guessing and investors panicking. The trader shorted 6,210 BTC at an entry price of $84,043 per Bitcoin, using borrowed funds to increase the size of the position. This move was part of a larger strategy to bet against Bitcoin’s price ahead of the upcoming Federal Open Market Committee (FOMC) meeting. The trader closed all short positions within a few hours, securing $9.46 million in profit.

The whale's actions did not go unnoticed. At one point, the whale was forced to add $5 million to his position after a group of traders attempted to trigger his liquidation—a tactic commonly known as “liquidation hunting.” Despite this, the whale managed to turn a profit. Following the successful short trade, the whale shifted focus to Ethereum, using a portion of the profits to accumulate over 3,200 ETH worth approximately $6.1 million.

The timing of the whale’s move coincided with growing market anticipation surrounding the FOMC meeting, which could influence investor sentiment in the cryptocurrency market. The meeting was expected to provide further clarity on the Federal Reserve’s monetary policy for 2025, a key factor that could impact risk assets like Bitcoin. Meanwhile, inflation-related concerns were showing signs of easing following the release of February’s U.S. Consumer Price Index (CPI), which recorded a 2.8% year-on-year increase, slightly below the expected 2.9%.

The revelation that the whale was using stolen funds for high-risk leverage trades has led to intense discussions and calls for greater transparency in the cryptocurrency market. The incident highlights the risks associated with leveraged trading and the potential for cybercriminals to exploit the market for illicit gains. The use of stolen funds for such trades raises serious ethical and legal concerns, and the incident serves as a reminder of the need for robust security measures and regulatory oversight in the cryptocurrency industry. The exposure of the whale as a cybercriminal underscores the importance of vigilance and due diligence in the cryptocurrency market, as well as the need for greater transparency and accountability in the industry.