"XPL Price Spike Exposes Deep Flaws in DeFi Trading Security"

Four large cryptocurrency investors, or whales, were accused of manipulating the price of XPL, the native token of the Plasma blockchain, which led to a 200% surge in its price to over $1.80 within minutes on Hyperliquid, a decentralized exchange. The manipulation resulted in the whales securing a combined profit of approximately $47.5 million, with the largest whale, identified as wallet 0xb9c, earning more than $15 million. The sudden spike in XPL's price marked one of the most extreme short squeezes and wealth redistributions seen in recent times. The manipulation allegations were posted by blockchain data platform Spot On Chain, which emphasized the need for Hyperliquid to address the issue.

The price manipulation had significant negative consequences for other traders. One trader reportedly lost $4.59 million on an XPL position, while another, known as X user CBB, admitted to suffering a $2.5 million loss on his short position. The allegations follow a previous $6.26 million exploit on Hyperliquid involving the Jelly my Jelly (JELLY) memecoin, which occurred due to a vulnerability in the platform's liquidation parameters in March. This incident highlights concerns about the reliability and security of decentralized trading platforms compared to their centralized counterparts.

The manipulation of XPL's price appears to have been orchestrated with precision, as wallet 0xb9c was responsible for initiating long positions on millions of XPL tokens, effectively clearing the entire order book and liquidating positions held by other traders. Following this, the whale began closing its long position, making $16 million in just one minute. XPL's price soared to $1.80 within two minutes. The address is still running a 1x leveraged position in XPL, valued at over $8.6 million, with an unrealized profit of more than $614,000, according to blockchain data from Hypurrscan.

One onchain sleuth, MLM, speculated that Tron Network founder Justin Sun might be behind one of the whale wallets. MLM suggested that wallet 0xb9c is “presumed to be associated with Justin Sun” and has been actively involved in the manipulation. However, Cointelegraph has not independently verified the ownership of the wallet address and has reached out to both Justin Sun and Hyperliquid for further comments. This speculation adds another layer of intrigue to the incident, as it suggests the involvement of a prominent figure in the blockchain industry.

The events surrounding the XPL token's price manipulation raise critical questions about the governance and regulation of decentralized trading platforms. Such platforms often operate with minimal oversight, which can create opportunities for whales to exploit market dynamics to their advantage. The manipulation of XPL's price not only highlights the vulnerabilities of these platforms but also underscores the need for robust mechanisms to detect and prevent such activities. The ongoing discussions around these issues will likely influence the development and adoption of decentralized trading platforms in the future.

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