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POPCAT Trading Chaos: $30 Million Positions Wiped Out
A recent incident on the Hyperliquid decentralized exchange caused significant market turbulence after a single trader executed unusually large leveraged trades on POPCAT.
The event began when an unidentified trader withdrew $3 million USDC from the OKX exchange and distributed it across 19 different wallets. These funds were then deposited into Hyperliquid, where the trader opened massive long positions on POPCAT, leveraging them around 5x. This action temporarily pushed the total exposure to roughly $26–30 million, making POPCAT one of the platform’s most actively traded tokens in that short period.
Blockchain intelligence firm Arkham reported that the trader’s positions were quickly liquidated, resulting in nearly total collateral loss. “Someone just passed $5 million of bad debt on POPCAT to Hyperliquid’s Hyperliquidity Provider (HLP)…These 19 accounts were liquidated for a combined $25.5 million of POPCAT, losing $2.98 million in collateral,” Arkham stated.
Fake Buy Wall Triggers Mass Liquidations
The disruption intensified when the trader placed a $20 million buy wall at $0.21, simulating strong market demand. This attracted other traders to enter long positions, believing in potential upward momentum. Minutes later, the buy wall vanished, causing POPCAT’s price to collapse to around $0.12, a drop of nearly 30% in 24 hours.
According to blockchain analyst Lookonchain, “The attacker then placed an approximately $20 million buy wall near $0.21, creating the illusion of strong demand — only to cancel the orders, triggering a liquidity collapse that led to mass liquidations. HLP absorbed the positions and lost around $4.9M, while the attacker’s entire $3M stake was wiped out.”
Deliberate Test or Accidental Event?
Crypto observers have debated whether the incident was accidental or a deliberate stress test. Vikas Singh, who monitored the event live, noted the unusual stability and manual maintenance of the buy wall, comparing it to past manipulative scenarios such as JellyJelly 2.0. Analysts suggest the event may have tested Hyperliquid’s automated liquidity mechanisms.
Speculation even arose regarding involvement from high-profile figures, including Binance’s former CEO CZ, who promptly denied any connection.
Broader Implications
This is the third major incident on Hyperliquid this year, highlighting potential vulnerabilities in managing liquidity concentration and systemic risk in decentralized exchanges. The episode also caused a temporary pause on Hyperliquid’s Arbitrum bridge, though deposits and withdrawals remained functional.
DeFi analyst Hanzo noted that exchanges may need improved monitoring systems, stricter leverage controls, or platform-specific safeguards to prevent similar disruptions in the future.
