Hyperliquid Faces $1.23 Billion Liquidation Crisis Amid Market Volatility

Hyperliquid's latest price was $39.48, up 7.103% in the last 24 hours. However, this positive movement came on the heels of a dramatic and historically significant event that sent shockwaves through the crypto market. On October 11, 2025, the Hyperliquid platform faced one of the most severe liquidation crises in its history. During a sharp and rapid market downturn, over 1,000 wallets were completely liquidated, while an estimated 6,300 others found themselves in negative balances. Among the most severe cases, 205 wallets lost over one million dollars each, and more than 1,000 users reported losses exceeding $100,000. This event led to a total capital loss of $1.23 billion for traders on the platform, marking one of the most financially damaging liquidation episodes in the exchange's history.

The liquidation event extended beyond individual accounts, with the platform recording the largest single trade liquidation of $203.36 million in an ETH-USDT transaction. This highlighted the extreme vulnerability of leveraged positions during periods of intense market volatility. In just 24 hours, $10 billion in long positions were liquidated, drawing widespread attention to Hyperliquid as a focal point in the aftermath of the market crash. The most heavily impacted assets included Bitcoin, Ethereum, and Solana, where the majority of liquidated positions were concentrated. These figures underscore the systemic risk that leveraged trading can pose during sharp market corrections.

Among the most scrutinized trades was a $1 billion short bet placed by a Hyperliquid whale just before the market downturn. The trader executed the final short order at 20:49 GMT, just one minute before a significant geopolitical event triggered a sharp decline in risk assets. This precise timing led to a cascade of liquidations across multiple exchanges and raised numerous questions about the circumstances behind the trade. Industry insiders and notable figures have since called for transparency and verification of the trade’s legitimacy. The whale reportedly earned $4 million in unrealized profits from this move, further fueling debates about the fairness and transparency of high-stakes trading in fast-moving markets.

Independent investigators have since attempted to trace the identity of the whale, uncovering a complex network of Bitcoin and Ethereum wallets linked to over 100,000 BTC and 570,000 ETH. These wallets were connected to deposits made into the Beacon Staking Contract and to an ENS identity associated with Garrett Jin, the former CEO of BitForex. Jin has long been under scrutiny for alleged mismanagement and missing funds at his previous exchange. His current holdings include over 46,000 BTC, valued at more than $5 billion, raising further questions about the source of capital behind the $1 billion short bet. The connection has intensified the debate around the influence of high-net-worth individuals on crypto market dynamics.

This event has reignited broader conversations about the role of large traders in shaping market outcomes and the potential for asymmetric advantages in terms of timing and execution. Critics argue that such high-stakes trades expose the imbalance of resources and information between institutional actors and retail traders. As a result, calls for stronger regulatory oversight and improved market safeguards have grown louder. Proponents of greater transparency argue that the incident highlights the need for real-time monitoring and reporting mechanisms to ensure fair and orderly markets.

Some market analysts have suggested that the sell-off could be interpreted as a natural correction following a 36% rally since April. They argue that the volatility was an overdue recalibration and that long-term bullish factors—such as increased institutional adoption and technological advancements in blockchain infrastructure—remain intact. However, others remain cautious, viewing the event as a warning sign of deeper structural vulnerabilities within the crypto market. They point to the centralization of influence among a small group of traders and the lack of robust safeguards as potential risks for future stability.

While the Hyperliquid event was the most significant, it was not the only incident to raise concerns. A separate case involved a trader who lost $21 million in a single transaction due to a compromised private key. This incident, though distinct from the broader market crash, highlights the ongoing risks associated with decentralized trading platforms. The loss underscores the critical importance of securing private keys and implementing robust security protocols to protect user assets. Taken together, these events reinforce the need for stronger user education, enhanced security measures, and greater accountability in the decentralized finance (DeFi) ecosystem.