Recently, Hyperliquid, a decentralized trading platform, shared information about a serious incident involving its own cryptocurrency token called HYPE. The platform discovered that the issue was caused by one of its former employees. This person had been fired earlier in 2024 due to insider trading, which means unfairly using secret company information to trade stocks or crypto tokens. Hyperliquid emphasized that it does not tolerate any type of dishonest behavior, especially related to trading.
What Happened with the HYPE Token?
The announcement came after the Hyperliquid community noticed something strange. Some people were placing unusually large bets against the HYPE token, predicting its price would drop (this is called “shorting”). Many suspected that big traders or someone inside the company might be involved. Investigators checked cryptocurrency transactions on the blockchain, which records all activity publicly, and found proof that the wallet used for these trades belonged to the former employee. The wallet was identified with the address “0x7Ae4” and still has active bets predicting HYPE’s price will drop.
Further investigation revealed that the wallet “0x7Ae4” was originally funded on the Arbitrum blockchain by another wallet “0xA2c5.” Later, the funds were sent to another address, “0x5a62,” on the Polygon blockchain. To explain, Polygon is a blockchain platform used to make transactions faster and more efficient. This address was also connected to activities on Polymarket, a platform where people place bets on future events using the cryptocurrency USDC, which is a stablecoin directly linked to the US dollar.
Between September and November, the “0x5a62” wallet received about $66,000 worth of USDC from Hyperliquid. Then, on December 17th, this wallet sent $53,000 USDC back to Hyperliquid and opened several risky trading positions. These included a large bet against HYPE by predicting its value would drop, worth $180,000 with a 10x leverage (leverage means borrowing extra money to increase the size of a bet). It also placed a short bet on Bitcoin worth $43,000 with even higher leverage of 40x, while keeping some funds aside.
Iliensinc, the co-founder of Hyperliquid, explained their strict rules. Employees and contractors are not allowed to bet on changes in HYPE’s price, whether they think it will go up or down. Breaking this rule immediately leads to being fired. The purpose of this rule is to protect the long-term health of Hyperliquid’s ecosystem and ensure fairness.
Hyperliquid Responds to Rumors About Transparency
Some news has questioned whether Hyperliquid manages its funds and transactions properly. The company strongly denied any wrongdoing and explained that its system is decentralized and transparent. Decentralized means that no single person or company controls the whole system; instead, transactions are managed across a global network. Hyperliquid said that all USDC cryptocurrency stored on its main system, called HyperCore, is accounted for and can be verified by checking the blockchain.
The company also rejected claims that it was allowing unfair trading privileges or manipulating transaction records. It clarified that any functions related to testing or development were not available to actual users. Additionally, Hyperliquid assured its community that all trading data, such as orders, fees, and payments, is publicly viewable for anyone running the right software.
Hyperliquid’s latest statement has reassured most users of the platform’s integrity and its commitment to staying transparent and ethical in its operations.
The original story appeared on CryptoPotato.