Crypto Exchange’s Outflows Swell on North Korean Trader Concern

12/23/2024 23:27

(Bloomberg) -- Hyperliquid, a crypto-derivatives trading platform, suffered its biggest-ever daily outflow as traders rushed to remove funds amid concern that North Korean hackers were trading on the exchange. Most Read from BloombergHo Chi Minh City Opens First Metro Line After Years of DelayReviving a Little-Known Modernist Landmark in BuffaloThe Architects Who Built MiamiNew York’s Congestion Pricing Plan Still Faces Legal HurdlesNew York City’s Historic Preservation Movement Is Having a Midl

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Digital wallets associated with the hackers have been trading on Hyperliquid since as early as October, according to Taylor Monahan, a security expert working at digital-wallet provider MetaMask. She shared the addresses of the suspected wallets and their activities on the social-media platform X on Monday. Trading is usually a way for North Korean hackers to test potential security bugs on a platform like Hyperliquid, according to Monahan.

Monahan’s posts have triggered a broad debate on social media, with some Hyperliquid supporters criticizing her for creating unnecessary panic. More than $112 million worth of the stablecoin USDC fled the exchange on Monday, according to data compiled by venture-capital fund Hashed on Dune Analytics. The price of HYPE, the exchange’s token, sank 20%, according to tracker CoinGecko.

Hyperliquid is a type of crypto exchange that combines the advantages of both centralized exchanges like Binance and decentralized exchanges like Uniswap. It provides some transparency similar to decentralized exchanges because it is built on its own blockchain. At the same time, it sacrifices some benefits of decentralization — the software to maintain the blockchain ledger is run by a closed group of developers — in order to provide competitively high speeds similar to centralized exchanges.

Hyperliquid has quickly turned into the largest crypto exchange by trading volume in decentralized finance, according to data compiled by user uwusanauwu on Dune Analytics, with a daily average of $8.8 billion in the past week. The platform recently reached a record 24-hour volume of more than $15 billion, according to an X post on Dec. 21.

Jeff Yan, a Hyperliquid co-founder, did not respond to a request for comment.