DeFi's Audit-Free Wild West: Hypervault Vanishes $3.6M Behind Tornado Cash

Hypervault, a decentralized finance (DeFi) platform on the Hyperliquid blockchain, has become the latest victim of a high-profile rug pull, with users reporting $3.6 million in losses. The incident, which unfolded in late September 2025, involved the sudden transfer of 752 ETH (worth nearly $3 million) to Tornado Cash, a privacy-focused cryptocurrency mixerDeFi Platform Hypervault Goes Offline Following $3.6M Rugpull^[1]. Blockchain analysts, including PeckShield, identified the withdrawals as part of a coordinated exit scam, with funds first bridged from Hyperliquid to Ethereum before being launderedHyperliquid faces $3.6M HyperVault loss tied to Tornado Cash^[2]. The platform’s website and social media accounts, including its X (formerly Twitter) profile, were subsequently taken offline, leaving investors without communication channelsDeFi Platform Hypervault Goes Offline Following $3.6M Rugpull^[1].

The rug pull followed a pattern of red flags, including unaudited smart contracts and misleading claims about security reviews. Hypervault’s developers had previously stated that audits were pending with firms like Spearbit, Pashov, and Code4rena. However, investigations revealed no evidence of these auditsHyperliquid faces $3.6M HyperVault loss tied to Tornado Cash^[2]. Community warnings, such as a September 4 alert from user HypingBull, were ignored despite confirming that Pashov had no involvementHyperliquid faces $3.6M HyperVault loss tied to Tornado Cash^[2]. The platform also promoted unrealistic yields, including 90% annual percentage rates (APRs) on HYPE tokens, which attracted investors despite the risksHyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear^[4].

The funds moved to Tornado Cash obscured the trail, making recovery unlikely. The mixer’s use, coupled with the deletion of official channels, has intensified scrutiny over the platform’s legitimacy. PeckShield highlighted the transfers as “classic rug pull signatures,” including liquidity drainage and a 98% drop in the platform’s token priceHyperVault Triggers Rug Pull Alarm as $3.6M Disappears …^[3]. The incident has also raised questions about Hyperliquid’s broader ecosystem, which has faced prior exploits, such as a $13.5 million loss in March 2025 due to a JELLY token manipulation attackHyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear^[4].

Hyperliquid’s HYPE token has seen renewed pressure following the rug pull, with its price dropping 23% weekly as of September 26Hyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear^[4]. The platform now faces heightened competition from ASTER DEX, which recently processed over $13 billion in daily perpetual futures volumeHyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear^[4]. Arthur Hayes, a prominent figure in the crypto space, has signaled mixed sentiment, polling followers about re-entering HYPE after selling his entire position in August. The token’s future remains uncertain, particularly with upcoming unlocks of $11.9 billion in November, which could exacerbate sell pressureHyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear^[4].

The Hypervault incident underscores systemic risks in DeFi, where unregulated projects often lure users with high returns while concealing vulnerabilities. Analysts note that the use of unaudited code and privacy tools like Tornado Cash creates a “wild west” environment where exit scams are frequent. Similar cases, including MetaYield Farm’s $290 million loss in February 2025 and MANTRA (OM)’s $5.5 billion collapse in early 2025, highlight the sector’s susceptibility to fraudHyperVault Triggers Rug Pull Alarm as $3.6M Disappears …^[3].

Hyperliquid and its stakeholders are now under pressure to address governance and transparency gaps. PeckShield and other security firms have called for verifiable audits, repayment plans, and stronger oversight to rebuild trust. Meanwhile, victims are consulting legal experts to explore recovery options, though the use of Tornado Cash complicates any legal actionHyperliquid faces $3.6M HyperVault loss tied to Tornado Cash^[2]. The incident also amplifies regulatory concerns, as cross-border transactions and mixer usage attract scrutiny from authorities, including the U.S. Department of JusticeHyperliquid faces $3.6M HyperVault loss tied to Tornado Cash^[2].