Wallets associated to whales on the Hyperliquid platform orchestrated a rapid pump-and-dump of the XPL token, netting up to $47 million, triggering massive liquidations and renewing scrutiny over DeFi leverage risks.
Key Takeaways:
- Whales swept the order book, driving XPL from ~$0.58 to $1.80 (200%+ gain in 2 minutes), netting $16M in under a minute.
- Hyperliquid’s HLP vault earned ~$47K fees during the spike, after nearly $12M loss in a prior JELLY event.
- Leveraged short traders were hit, with losses of $4.59M and $2M on two accounts, showing vulnerability to manipulation.
On Aug 27, 2025, whales deposited $16M USDC into Hyperliquid and opened a 3× long on XPL, sweeping the thin order book. XPL spiked 200% from ~$0.58 to $1.80 in under 2 minutes. The orchestrators exited quickly, booking ~$16M profit.
Millions in Losses as Shorts Are Liquidated
An X (formerly Twitter) post from Spot On Chain highlighted that four wallets were responsible for the XPL price manipulation, victimizing two traders with $4.49 million and $2M in separate losses. They also noted that this move is “one of the wildest short squeezes and wealth redistributions” they have seen.
Even hedged traders, such as one from the “qwatio hunting squad,” reported $2.5 million losses, showing the difficulty of surviving sudden DeFi manipulation events.
During the same volatile period, Hyperliquid’s HLP vault collected around $47,000 in fees, marking a rare win for liquidity providers, albeit set against past losses on JELLY.
XPL Price Retraces After Whales Exit
Plasma (XPL) has since dumped, now ~$0.5209 (+3% 24h), down ~70% from the peak, per CoinMarketCap.
Plasma price today – CoinMarketCap
Brokerage platforms and on-chain data show that the earlier price spike was a product of manipulation, not organic volume, and the token has since reverted to closer to its pre-event range.
Calls Grow for Stronger Risk Control on DeFi Platforms
Analysts demand dynamic leverage limits, improved liquidation engines, and anti-manipulation checks on leveraged DeFi venues. Thin-liquidity tokens like XPL remain ripe for abuse.
Outlook: A Cautionary Tale for Leveraged Trading
The XPL event underscores extreme risk in thin-order-book leveraged trading. Whales scored millions, LPs earned modest fees, but smaller traders suffered devastating losses.
Without better risk controls, manipulations will recur. Traders should manage leverage carefully and expect volatility in pre-launch or illiquid DeFi tokens.
Summary
Whales on Hyperliquid pumped XPL 200% in 2 minutes, netting ~$47M while liquidating shorts for millions in losses. XPL later retraced ~70%, proving the move manipulation, not organic demand. Hyperliquid’s HLP vault earned ~$47K fees, but traders absorbed huge hits.
The incident highlights urgent need for dynamic leverage rules and anti-manipulation safeguards on DeFi platforms. Until then, thin-liquidity leveraged tokens remain risky battlegrounds.
