Decentralized derivatives platform Hyperliquid suffered a $4.9 million loss Wednesday after a carefully orchestrated manipulation of the POPCAT token, according to data shared by blockchain sleuth Lookonchain.

The attacker withdrew $3 million in USDC from centralized exchange OKX, splitting it across 19 wallets to create a massive leveraged long position valued between $20 million and $30 million in POPCAT.

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The attacker then placed $20 million buy order near $0.21, pulling in liquidity and pushing prices higher. Once the position was sufficiently inflated, the attacker abruptly pulled the buy orders, causing a crash in POPCAT prices, which led to cascading liquidations of leveraged positions, including the attacker’s own $3 million collateral, which was gone in seconds.

Hyperliquid’s community-owned liquidity vault (HLP), which acts as a safety net for liquidations, had to absorb the remaining losses after collateral was exhausted, leading to a bad debt of $4.9 million, deepening the impact on the leading perpetual focused decentralized exchange.

CoinDesk reached out to Hyperliquid for comment via X.

One market participant described the episode as "peak degen warfare."

"Someone torched 3M just to nuke liquidity and drag HLP into a 5M loss. Classic manufactured demand illusion followed by a flush. Nothing magical here. Just an attacker exploiting thin depth and automated LP absorption," the participant said on X.