Hyperliquid Temporarily Paused Some Withdrawals as Popcat Trader Draws Scrutiny

Hyperliquid temporarily paused Arbitrum-based deposits and withdrawals due to a significant loss in a community-owned vault, which suffered nearly $5 million in damages. This incident was associated with trades made by a user identified as MLM, who engaged in risky positions on the meme coin Popcat, ultimately leading to liquidation. Following user inquiries on Discord about the situation, Hyperliquid confirmed that while Arbitrum bridge transactions were paused, other withdrawals were processing normally. The Popcat-linked trades raised concerns about potential manipulation and drew scrutiny regarding Hyperliquid's decentralization. In recent months, the community vault had faced similar challenges due to user liquidations, prompting questions about the exchange's risk management practices and the effects on its community-led operations. The evolving situation highlights the volatility within the decentralized finance space, particularly around tokens with fluctuating values like meme coins.

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