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Crypto Potato 2025-12-24 14:16:45

Hyperliquid Confirms Former Employee Behind HYPE Shorting Activity

Hyperliquid has confirmed that a recent large shorting incident involving its native HYPE token was linked to a former employee who was dismissed in the first quarter of 2024 for insider trading. In a statement issued this week, the decentralized perpetuals exchange said on-chain analysis had verified that the wallet behind the activity belonged to the ex-employee. Hyperliquid reiterated its zero-tolerance policy toward trading misconduct. Behind the HYPE Dump The disclosure comes amid increased community scrutiny after unusually large short positions emerged on the platform, which initially sparked speculation that major “whale” traders or internal actors were responsible. An on-chain sleuth said that wallets connected to the address 0x7Ae4, which it identified as belonging to a former employee, are still actively holding HYPE short positions directly on the protocol. On-chain data also found that 0x7Ae4 was first funded on the Arbitrum network by wallet 0xA2c5, which later transferred funds to address 0x5a62 on the Polygon network. This Polygon address appears to be linked to extensive activity on Polymarket under the account name “trytings.” Between September and November, 0x5a62 received roughly $66,000 in USDC from Hyperliquid. On December 17, five days before the company’s public clarification, the same wallet deposited about $53,000 USDC back into Hyperliquid and opened leveraged short positions totaling approximately $223,000. These included a $180,000 HYPE short at 10x leverage and a $43,000 Bitcoin short at 40x leverage, while retaining around $63,000 in free margin. Hyperliquid co-founder Iliensinc said employees and contractors are prohibited from trading HYPE derivatives, either long or short, and violations result in immediate termination. The firm said the policy is intended to ensure accountability and maintain alignment with the long-term health of the ecosystem. Response to Solvency and Transparency Claims In a related development, Hyperliquid pushed back against what it described as factually incorrect claims in a recent article, while reaffirming that the protocol is fully solvent, transparent, and decentralized. The platform said all USDC on HyperCore is verifiably accounted for on-chain, and noted the report failed to include native HyperEVM USDC balances. It also rejected allegations of retroactive volume manipulation, special user privileges, and “godmode” controls, clarifying that cited functions are testnet-only or misinterpreted. Hyperliquid said that its entire state, including orders, trades, fees, and liquidations, is publicly verifiable by anyone running a node. The post Hyperliquid Confirms Former Employee Behind HYPE Shorting Activity appeared first on CryptoPotato .

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