Hyperliquid found that its former employee shorted around 4,000 HYPE tokens in November after a member of its community alleged the existence of insider trading. After this incident, HYPE prices fell below the bullish pattern that could have led to a rally upon breakout.
Decentralized perpetuals exchange Hyperliquid denied allegations of insider trading that a community member made against the platform. A community member who goes by the pseudonym cobe.hype claimed the address—address 0x7ae4… 1028, which belonged to “one of the Hyperliquid team wallets”—sold about 4,000 HYPE tokens ($134,000) in a single day in November.
Just a few weeks later, after a thorough investigation, the exchange stated that the person who shorted this massive amount of tokens on a day was an ex-employee. Hyperliquid did not take responsibility for this employee’s actions as the person was already fired in 2024.
Refuting the allegation, co-founder Iliensinc stated, “This individual is no longer associated with Hyperliquid Labs, and their actions do not reflect our team’s standards or values,” in the HYPE Discord channel. Lliensinc further mentioned that the employees and contractors are bound by strict ethical measures with zero tolerance for insider trading.
Open interest crashed to $1 billion
The open interest of Hype futures crashed when this activity was revealed. The OI, which represents the number of open long and short contracts, was just recovering before this allegation hit the platform. The OI crashed from $2.3 billion to $1 billion as the investors stepped away from the leveraged positions.
HYPE crashed from $59 to $25
Not only did the OI crash, but the prices too took a heavy hit. The token was just building some momentum within the broadening wedge, which eventually would have broken out and reached higher.
But this allegation spoiled this bullish pattern and crashed the prices below the lower trendline. After hitting $59 in September, the token is now at $25, losing more than 50%.
