Whales Trigger $160M XPL Liquidations in 10 Minutes

A whale on Hyperliquid is attempting to manipulate the price of the XPL token, leading to widespread liquidations of short positions and significant financial losses for traders. The incident, which occurred on the decentralized perpetual futures exchange, involved rapid price surges and large-scale trading strategies that exploited low liquidity conditions, resulting in a dramatic shift in market dynamics.

The manipulation began when a whale deposited $16 million in USDC into Hyperliquid and swiftly opened a long position of 15.2 million XPL tokens within a span of two minutes. This sudden influx of capital pushed the price of XPL from $0.60 to $1.80—nearly a 200% increase—which effectively drained the order book and triggered a cascade of liquidations. Over $160 million in open interest was wiped out in less than 10 minutes, with short positions accounting for more than 80% of the liquidated value.

One of the most notable losses occurred for a trader whose position was fully liquidated, resulting in a $4.59 million loss. Another user reported losing $2.5 million on a short position, while a third, known on X as CBB, admitted to losing $2.5 million and vowed never to trade in isolated markets again. The largest whale in the manipulation, wallet 0xb9c, reportedly earned over $15 million by closing a portion of its long position within a single minute. At the height of the event, four whale accounts collectively profited $47.5 million.

The XPL token is the native asset of the Plasma blockchain, a stablecoin-focused project that has yet to launch its mainnet. Traders had been hedging their positions in anticipation of the token’s official release, as pre-market valuations suggested a potential 10x return. However, the volatility triggered by the whale’s actions led to unexpected and significant losses for many traders who had assumed a more stable market environment.

The manipulation highlighted critical weaknesses in Hyperliquid’s risk controls. While the platform emphasized that no bad debt was incurred and that the incident was within the bounds of its trading rules, it acknowledged the need for improved liquidity in such high-volatility pre-launch markets. In response, Hyperliquid announced plans to introduce a price cap that would limit price swings to 10 times the token’s eight-hour average price. This change is intended to provide clearer boundaries for traders but would not have mitigated the losses incurred during this event.

Critics argue that the incident underscores the challenges of decentralized trading platforms, which, while designed for high-leverage and permissionless access, are vulnerable to manipulation due to thin order books. Unlike centralized exchanges, which typically impose position limits and other safeguards, decentralized platforms like Hyperliquid rely on market participants to maintain liquidity. As a result, the event has sparked renewed debates about the risks associated with trading in low-liquidity, pre-launch markets and the need for better risk management strategies for retail traders.

In the aftermath, some traders have reopened long positions in XPL, particularly after Hyperliquid updated its mark price calculation system. One operator, identified as 0xb9c...6801e, dispersed 27.1 million USDC across 11 wallets and reopened a $18.14 million 1x long position, generating an unrealized profit of $1.148 million. This move indicates that some market participants see continued upside potential in XPL, despite the recent volatility.

The broader implications of the event are likely to influence trading behavior and platform design in the decentralized finance sector. As whales increasingly target low-liquidity tokens for profit, traders must remain vigilant and employ robust risk management practices. For platforms like Hyperliquid, the challenge lies in balancing innovation and accessibility with the need for stability and investor protection in an environment where market manipulation can occur rapidly and with devastating consequences.

Source:

[1] XPL Futures on Hyperliquid See $130M Wiped Out Ahead of ... (https://finance.yahoo.com/news/xpl-futures-hyperliquid-see-130m-110132547.html)

[2] XPL Token Manipulation on Hyperliquid: A Classic Pump- ... (https://medium.com/@Tradingpass/xpl-token-manipulation-on-hyperliquid-a-classic-pump-and-liquidation-scheme-in-the-midst-of-96650f5c2a9f)

[3] Hyperliquid whales net $48M on 200% XPL rally, amid ... (https://cointelegraph.com/news/plasma-xpl-whale-manipulation-hyperliquid-justin-sun)

[4] Hyperliquid XPL (XPL) Whale Manipulation Leads to $4.59 ... (https://blockchain.news/flashnews/hyperliquid-xpl-xpl-whale-manipulation-leads-to-4-59m-short-liquidation-of-0xc2cb-trading-alert)

[5] Whale Trades on Hyperliquid Wipe Out XPL Order Book ... (https://thedefiant.io/news/defi/whale-trades-on-hyperliquid-wipe-out-xpl-order-book-triggering-mass-liquidations)

[6] XPL Trader Reopens $18.14M 1x $XPL Long After ... (https://blockchain.news/flashnews/xpl-trader-reopens-18-14m-1x-xpl-long-after-hyperliquid-mark-price-update-deploys-27-1m-usdc-across-11-wallets)