Crypto derivatives platform Hyperliquid is trending on X, and the platform’s token $HYPE suffered a huge decline during the late hours of Monday. Why’s Hyperliquid trending? And should you be using it now?
Why is Hyperliquid trending?
Taylor Monahan, who works for Metamask as a security researcher and posts other crypto security threats on her X account, shared an X post suggesting that North Korea-linked hackers are using the Hyperliquid platform. Why does this matter?
DPRK’s trading career is…uh….going…..
tbh if i was the dude managing Hyperliquid’s 4 validators (or those fucking ghetto ass binaries on gh) I would be shitting my pants right now.
Hyperliquid dudes dont seem worried at all though so im sure its fine.
pic.twitter.com/JrrU7t1sJe
— Tay
(@tayvano_) December 22, 2024
The nature of these transactions suggests that North Korean hackers could be testing Hyperliquid’s security. Note that North Korean hackers have stolen billions from crypto platforms, particularly exchanges. We recently covered Chainalysis’ crypto hack report for this year. Check that out here.
Monahan urged Hyperliquid to beef up its defense in anticipation of a possible attack. As expected, the post triggered widespread concerns among users, leading to massive outflows.
Reports state that Hyperliquid witnessed its largest net outflows on Monday. Some reports claim net outflows reached $502 million on Monday, while inflows were around $250 million.
Another crypto analyst, Prithvir Jhaveri, echoed Monahan’s tweet, noting that Hyperliquid could be faced with danger, which would be disastrous for users. Hyperliquid (HL) relies on a small number of validators, which Jhaveri believes could be a problem. He urged the platform to increase its validators from 4 to 16.
[Trigger Warning]@HyperliquidX faces some serious risks.
I’ve organized them in descending order with mitigation logic where applicable.
1. OpSec
2. OFAC
3. SEC
4. Market-Maker Vault Concentration
5. Performance Degradation
6. FDV to Float Ratio1. OpSec risk
Wallet… pic.twitter.com/pdU1zX5X5T— Prithvir (@Prithvir12) December 23, 2024
Beyond a hack, Jhaveri believes Hyperliquid could be in trouble with the US Office of Foreign Assets Control (OFAC) and the Securities and Exchange Commission (SEC) for interacting with users from a sanctioned region.
On possible SEC threats, he wrote, “The SEC could go after HL for operating as an unregistered broker. The good thing for HL is that the next administration’s SEC and Congress are positioned to be pro-crypto and freedom. The issue, however, is that the sponsors for this crypto lobby are directly competitive with HL. HL didn’t take any VC funding. They’re up against the big money that is economically incentivized to protect the interests of the current CEXs (Coinbase and Kraken) and L1s (Ethereum and Solana).”
Hyperliquid: All is well!
Hyperliquid’s team has responded to the claims about hack possibilities. The team said on its Discord that There has been no DPRK exploit—or any exploit for that matter—of Hyperliquid. All user funds are accounted for.”
The team added that “no vulnerabilities have been shared by any party.” In addition, the team added that “trusted parties” have confirmed that it is following the best practices.
Everyone relax.
CertiK gave Hyperliquid a operational security score of 89/100. pic.twitter.com/aE2QxMN97t
— Pop Punk (@PopPunkOnChain) December 23, 2024
A hypothetical situation
Hyperliquid Bridge has ended with a $249M Net Outflow and Bridge TVL has dropped 10% to $2.08B on 23 Dec
Price of HYPE has rebounded 16% from the lowest point yesterday at $25.3 back to $29.2
Data: https://t.co/S08vI5ue37 https://t.co/GLa0nb0ujX pic.twitter.com/4nbLQ4XU0y
— Tom Wan (@tomwanhh) December 24, 2024
If North Korea-linked hackers hack Hyperliquid, the results would be similar to other notable hacks in the crypto space. For example, the Ronin bridge, which powers Axie Infinity, suffered a hack worth over $600 million in 2022. The attackers, linked to the Lazaros Group, exploited private keys to control the bridge.
In addition, the attack drained over $625 million worth of crypto, crippling the platform’s liquidity. Beyond the funds, the hack led to a loss of trust on the Axie Infinity platform.
Hyperliquid owners should be glad that @tayvano_ flagged her concerns yesterday.
DPRK was gonna look into HL regardless of what anyone on this app says.
If the HL team wasn’t already working on ensuring bridge and validator security, yesterday’s tweet almost certainly has made… pic.twitter.com/MXNATXYHqm
— cygaar (@0xCygaar) December 23, 2024
So, a possible hack on Hyperliquid could lead to massive fund depletion and loss of trust. Some analysts maintain that users should not ignore a potential threat to Hyperliquid. As of now, Hyperliquid is not hacked. However, we advise users to exercise caution.
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