Hyperliquid briefly suspended withdrawals on Wednesday following unusual trading activity tied to the Popcat meme coin. The halt affected traders on the Arbitrum-based platform, preventing both deposits and withdrawals as the decentralized exchange worked to contain what appeared to be harmful or exploitative trades.
According to blockchain researcher Conor Grogan, community members quickly voiced concerns on Discord, prompting the platform to restore withdrawals within hours. An admin later clarified that only the Arbitrum bridge was paused, while all other transactions continued to operate normally.
$4.9M Community Vault Loss Sparks Centralization Concerns
The pause followed a major hit to a Hyperliquid community vault, which lost $4.9 million due to liquidations connected to a trader known as MLM. This trader had taken large long positions on the Popcat token—an asset that, despite a recent short-term rebound, has dropped 91% in value over the past year. MLM publicly claimed that the events constituted a targeted attack on Hyperliquid, though the exchange has not issued any formal confirmation or comment on the allegation.
The situation adds to ongoing concerns about Hyperliquid’s decentralization and governance. Earlier, the platform faced criticism after removing the Solana-based token JELLYJELLY in response to similar trading irregularities. As users question how decisions are made and how securely the platform can respond to market manipulation, the incident highlights the increasing scrutiny surrounding decentralized exchanges and their resilience.
