A coordinated attempt to manipulate the price of Fartcoin (FART) on Hyperliquid ended in a $3 million liquidation loss after the scheme triggered an automatic safety mechanism that forced the platform’s own liquidity pool to absorb the fallout.
However, blockchain analysts tracking the incident say the attacker likely walked away with a net profit through hedged positions they had placed elsewhere, leaving Hyperliquid’s liquidity providers holding the bag.
How the Attack Unfolded
According to Peckshield and Lookonchain, a single entity spread about $15 million worth of FART long positions across four wallets, accumulating over 145 million tokens. Their data shows the wallets were funded from Binance and Bybit, with three of them traced by on-chain researcher mlmabc to the same entity that had previously squeezed the XPL token.
The alleged manipulator deliberately chose a low-liquidity environment, which made it easier for them to move the price, with Fartcoin going up by about 20% around the time the positions were being built. Hyperdash, a trading terminal built for Hyperliquid, reported that at their peak, the coordinated longs had generated a combined unrealized gain of $1.3 million. Even price data from CoinGecko confirmed the move, showing FART going from near $0.20 to a high of $0.2476 between 20:05 and 23:55 GMT on April 8.
After that, the trap was sprung. Instead of exiting, as would have been expected, given that prices were flying, the schemer deliberately let the positions get liquidated, a tactic Peckshield called “suicide” liquidation. According to them, the intention was to trigger the platform‘s Auto-Deleveraging (ADL) mechanism, which forcibly closes the opposing side of a trade in extreme situations to cover losses.
In this instance, ADL meant that short traders were closed out against their will, and Hyperliquid’s own liquidity pool, known as HLP, was left holding a $13 million long position in a collapsing market. One wallet, 0x06ce, exited with a $512,000 profit before the liquidation cascade, according to Hyperdash.
Peckshield’s and Lookonchain’s assessments were that the manipulator went underwater for $3 million following the liquidation, with the former suggesting they may have profited elsewhere.
“A $3M loss on paper, but likely a massive net profit via cross-revenue hedging,” wrote Peckshield.
Fartcoin Down 10%
HLP is said to have lost about $1.5 million in the last 24 hours, and Fartcoin is down 10% over the same time period after its price fell from the $0.24 it reached during the manipulation episode.
Meanwhile, Hyperliquid’s HYPE token, which dipped by 23% following a similar liquidation incident last year involving the JELLY token, seems to have fared better this time. At the time of writing, it had only shed a mere 0.4% off its level from 24 hours ago and was up more than 10% in the last 7 days.
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