The Hyperliquid ecosystem is reeling after a $3.6 million rug pull at its HyperVault protocol and a related exploit, sending shockwaves through its native token and DeFi community.
Key Takeaways:
- On-chain analytics flagged 752 ETH, worth $3 million, ****bridged out from HyperVault and routed to Tornado Cash, alongside multiple token drains.
- HYPE has lost double-digit percentage in the past 24 hours amid the fallout, underscoring contagion risk in its DeFi layer.
- HyperVault’s social profiles went dark, and its website was taken offline, which are classic red flags in rug-pull incidents.
A DeFi protocol built on the Hyperliquid ecosystem, HyperVault, is under fire for allegedly staging a rug pull. Reports from PeckShield and various crypto security watchers reveal that the protocol drained funds worth approximately $3.6 million, including 752 ETH (~$3 million) bridged from Hyperliquid to Ethereum, converted, and sent to Tornado Cash, a mixer often used to obscure fund flows.
In addition to ETH, assets such as UPUMP, USDC, and WHYPE tokens were also removed. Following the exit, HyperVault’s official X account was deleted and its website taken offline, a move consistent with many rug pull cases. Analysts and security firms including PeckShield argue that this was a deliberate exit rather than a hack.
Linked Exploit Deepens Contagion Fears
The impact did not stop with HyperVault. Hyperdrive, another protocol in the Hyperliquid ecosystem, froze trading reports of an exploit. While investigations are still underway, the interconnected nature of these DeFi protocols how quickly risk spreads through ecosystems that share liquidity and infrastructure. For users and investors, the rapid collapse of confidence signals the fragility of trust when a single protocol falls.
HYPE Token Struggles to Hold Ground
As of this writing, HYPE token is trading at approximately $43.82, with a modest gain of 0.5% over the past 24 hours, according to TradingView’s real-time data.
In technical perspective, RSI (14) is hovering at 41, reflecting weakened momentum and increased selling pressure. TradingView earlier recorded HYPE pulling back from the $45 level after briefly testing RSI values above 70, suggesting overbought conditions before the rug pull news surfaced. Analysts had previously projected a move toward $60–70 if bullish momentum continued, but with the fallout from HyperVault, those scenarios now appear unlikely without a significant rebound in sentiment.
DeFi Security and Trust Under Scrutiny
HyperVault’s collapse shows how dependent ecosystems can unravel when one critical component fails. The reliance on mixers like Tornado Cash to launder funds is a recurring theme across exit scams, and it highlights the challenge regulators and blockchain analysts face in tracking illicit flows. The incident is also expected to reignite debates about the effectiveness of security audits, the transparency of tokenomics, and the sustainability of yield-driven DeFi products. Investors and developers alike are now weighing whether Hyperliquid’s reputation can survive a hit of this scale.
What’s Next for Hyperliquid?
The next phase for Hyperliquid depends on the response of its development team and the broader DeFi community. Market watchers will be looking for on-chain forensic updates, potential recovery efforts, or even compensation strategies if the project aims to restore confidence. Traders are closely monitoring whether HYPE can maintain support between $42 and $45, as a decisive drop below could trigger further losses. Beyond immediate price action, the fallout may also invite renewed regulatory scrutiny, as repeated DeFi collapses add pressure on authorities to enforce stricter oversight.
In the days ahead, the resilience of the Hyperliquid ecosystem will be tested. For now, investors are reminded that in crypto, even established ecosystems remain vulnerable when trust is broken at their core.
Summary
HyperVault’s alleged $3.6M rug pull—moving 752 ETH through Tornado Cash and draining multiple tokens—sparked broader Hyperliquid contagion fears. HYPE wobbled as trust eroded, while a linked Hyperdrive exploit report underscored systemic fragility. The road back hinges on transparent forensics, concrete recovery steps, and a rapid confidence rebuild.
