POPCAT Plunges 43% in Hyperliquid Manipulation Scheme

According to detailed analysis by DeFi researcher Hanzo, the manipulation scheme began approximately 13 hours before the market disruption when an unknown trader withdrew $3 million in USDC from the OKX exchange. The trader strategically distributed these funds across 19 different wallets on Hyperliquid, a tactic designed to obscure their true position size and avoid detection. Using this distributed capital, the trader then initiated sizable long positions on POPCAT, accumulating total exposure estimated between $20 million and $30 million through leveraged trading.

The manipulation strategy reached its critical phase when the trader placed a massive buy wall at the $0.21 price point, with orders totaling $30 million lined up on Hyperliquid’s order book. This artificial display of buying interest created a convincing illusion of strong demand for the memecoin, successfully attracting genuine traders who interpreted the buy wall as legitimate market sentiment. The coordinated nature of this operation, involving multiple wallets and substantial capital deployment, demonstrates the sophisticated methods now being employed in cryptocurrency market manipulation schemes.

The scheme reached its devastating conclusion when the trader abruptly removed the $30 million buy wall without warning, causing an instantaneous collapse in POPCAT’s price. This sudden withdrawal of artificial support triggered a liquidation cascade that wiped out all long positions taken by traders who had followed the apparent buying momentum. The unknown trader themselves lost their entire $3 million collateral in the process, while Hyperliquid’s HLP (Hyperliquid Perpetuals) system automatically absorbed the open positions, resulting in an additional loss of approximately $4.9 million to the platform’s liquidity pool.

The aftermath saw POPCAT’s price plummet from $0.21 to $0.12, representing a 43% decline in a matter of hours. Total liquidations across the platform reached approximately $63 million as the manipulation triggered a broader market selloff across the token. The incident’s ripple effects extended beyond POPCAT, with Hyperliquid’s native token HYPE also declining significantly following the event. According to CoinGecko data, HYPE was trading at $38.25, representing a 7% decrease on the weekly timeframe as investor confidence in the platform wavered.

This incident marks the third major market disruption on Hyperliquid in 2025, raising serious questions about the exchange’s approach to handling liquidity concentration and its systemic risk management practices. Following the manipulation, the Hyperliquid team took emergency measures to stabilize the market and close any remaining exposures. The platform subsequently paused its Arbitrum (ARB) bridge, though it continued processing deposits and withdrawals normally through other channels.

The cryptocurrency community has expressed significant skepticism regarding the circumstances surrounding this incident, with many suggesting it may not have been a random liquidation event. Some market participants believe the rapid loss of millions in such a short time frame appears too calculated to be merely coincidental, instead resembling either a deliberate stress test or a targeted attack aimed at destabilizing Hyperliquid’s liquidity system. These concerns are amplified by the repeated nature of such disruptions on the platform throughout 2025.

As decentralized exchanges continue to gain market share, incidents like the POPCAT manipulation highlight the ongoing challenges in maintaining market integrity within DeFi ecosystems. The sophistication of this scheme, involving coordinated multi-wallet operations and artificial order book manipulation, underscores the evolving threats facing decentralized trading platforms and their users. The repeated nature of these disruptions on Hyperliquid suggests fundamental issues with liquidity management and risk controls that require urgent addressing to maintain user confidence in decentralized finance infrastructure.