Whales Trigger $46M XPL Rout, Forcing Hyperliquid to Reinvent Pre-Market Rules

Hyperliquid, a decentralized derivatives trading platform, has announced the introduction of new safeguards in response to a recent pre-market price manipulation incident involving the upcoming Plasma blockchain’s XPL token. The event saw four large wallet addresses—commonly referred to as whales—profit from a 200% price surge of XPL within minutes, leading to significant losses for other traders and raising questions about the risks inherent to pre-launch trading.

The manipulation occurred as a whale wallet—identified as 0xb9c—initiated a long position on XPL, rapidly liquidating short positions and triggering a cascading effect. One trader lost approximately $4.5 million, while another lost $2.5 million. Analysts noted that four key addresses collectively made over $46 million in profits from the event. The sudden price surge caused Hyperliquid’s system to shift from standard liquidations to auto-deleveraging, a mechanism used when positions fall below margin requirements and cannot be liquidated through the order book without triggering bad debt [2].

According to on-chain data and reports, the whale activity led to the draining of XPL liquidity on Hyperliquid, with the token reaching $1.80 before plummeting back to around $0.61. The manipulation was not limited to a single incident; prior to this, Hyperliquid had faced criticism for a $6.26 million exploit involving the JELLY memecoin, which was attributed to a vulnerability in its liquidation parameters [1]. This incident has further intensified scrutiny of the platform’s pre-market mechanisms, particularly for assets in early stages of price discovery.

In response, Hyperliquid is implementing two key upgrades to its system. The first is a hard cap that limits hyperp mark prices to 10x the 8-hour exponential moving average, which aims to provide clearer risk boundaries for overcollateralized shorts. The second update involves incorporating external perpetual market data—such as from Binance—into the mark price formula for hyperps, improving the reliability of price signals in markets with low liquidity [2]. The platform emphasized that these changes are not retrospective in nature and would not have altered the outcome of the XPL incident but are intended to prevent similar situations in the future.

A pseudonymous on-chain analyst, MLM, suggested that one of the whale wallets involved in the XPL manipulation could be associated with Justin Sun, the founder of the TRON network. While this has not been independently verified, the wallet in question—0xb9c—was found to have a 1x leveraged XPL position worth over $8.6 million, with over $614,000 in unrealized gains [1]. The wallet’s activity included both strategic long positions and large limit orders at various price levels, further indicating a deliberate attempt to influence the XPL price.

Hyperliquid’s team reiterated that pre-launch markets are inherently volatile and unpredictable. While the platform operates as a permissionless protocol, it has no obligation to compensate traders who fail to manage their risks adequately. The team advised users to thoroughly understand the mechanics of such markets and apply appropriate risk management before trading [2]. Despite the controversy, Hyperliquid’s native token, HYPE, rose more than 10% in the 24 hours following the incident, reaching a new all-time high of around $51 [2].

The incident highlights the challenges of managing pre-launch trading environments in decentralized platforms. While the system functioned as designed—executing liquidations and auto-deleveraging without technical failures—traders continue to face the risks of market manipulation by large players. As Hyperliquid introduces new safeguards, the broader crypto community will be watching closely to see how these changes affect future trading dynamics and investor confidence.

Source:

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

[2] Hyperliquid to introduce new safeguards following crypto ... (https://www.theblock.co/post/368486/hyperliquid-new-safeguards-following-whale-driven-xpl-pre-market-liquidations)

[3] XPL token spikes and crashes on Hyperliquid; Justin Sun ... (https://www.mitrade.com/insights/news/live-news/article-3-1072479-20250827)