Hyperliquid Temporarily Paused Withdrawals Amid Popcat Trader Scrutiny

Hyperliquid temporarily paused Arbitrum-based deposits and withdrawals due to significant losses in a community-owned vault, which suffered nearly $5 million in liquidations attributed to a trader known as MLM on X. This individual leveraged $3 million to enter into $20 million worth of long positions on the meme coin Popcat, which subsequently faced a downturn. Despite the brief withdrawal pause, other transactions remained functional, and soon after, operations returned to normal. The incident raised concerns over the decentralized nature of Hyperliquid, as MLM claimed the liquidation appeared to be a deliberate act against the platform. The rising turbulence around the meme coin, despite showing a marginal increase at the time, led to more scrutiny on the potential risks associated with community-driven investments. This event follows other high-profile incidents in the crypto space, emphasizing vulnerabilities in Decentralized Finance (DeFi) ecosystems and the implications of trader behavior on community funds.

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