Papertrade tightens limits after trader profits $1.28 million from Hyperliquid ETH price moves

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Papertrade tightens limits after exploit

Highlights

Papertrade tightened open position limits after wallet 0x2025...840e profited $1.28 million via Hyperliquid-based ETH price manipulation on launch day.
The wallet traded $231 million of ETH on Hyperliquid, paying $52,000 in fees, with Papertrade showing $3.18 billion volume and $2.48 million withdrawals.
Papertrade's $5 million liquidity pool and Hyperliquid's HLP vault, which posted $4 million and $4.9 million losses in 2025, highlight risks of large single-trader positions on shared-asset venues.

Launch-day trades trigger risk controls

As reported by The Block, the wallet identified as 0x2025...840e repeatedly opened large positions on Papertrade, then bought or sold thousands of ETH on Hyperliquid to move the reference price before closing those positions. Papertrade said on Sunday it is tightening limits on open positions after what it described as overnight manipulation attempts against its Hyperliquid-based BTC and ETH price feeds.

Papertrade went live at 10 a.m. ET on Saturday on HyperEVM, the smart contract layer of Hyperliquid's blockchain. The exchange prices trades at the midpoint of Hyperliquid's best bid and offer and takes the other side of positions through a shared USDC pool, while losing traders receive the protocol's PAPER token.

According to trading data reviewed by The Block, the wallet bought about 6,060 ETH on Hyperliquid between 6:01 p.m. and 6:02 p.m. ET on Saturday, lifting the price by roughly $3, or 0.12%. At 6:03 p.m. ET, it sold about 5,210 ETH and the price fell around $3.50.

At 1,000x leverage, a 0.1% move can wipe out the full margin on a position. The wallet traded about $231 million of ETH on Hyperliquid on Saturday evening and paid roughly $52,000 in fees, while Papertrade's portfolio page showed $1.28 million in profit on $3.18 billion in volume and withdrawals of about $2.48 million against $1.2 million in deposits.

Pricing model faces scrutiny in crypto derivatives

Later on Saturday, the same wallet opened 30 ETH short positions at 660x leverage with a combined notional value of $297 million, then sold about 6,590 ETH on Hyperliquid over the next three minutes, pushing the price down to $2,504.40. Those shorts remained open for more than three hours before being liquidated at 10:31 p.m. ET at $2,509.95, producing a loss of about $450,000 and minting roughly 17.6 million PAPER to the wallet, according to Papertrade's interface.

X users first flagged the activity on Saturday evening, with Boblob pointing to two wallets moving ETH on Hyperliquid and butler later publishing the 0x2025 address along with a trade breakdown. Papertrade said its launch queue made the timing of opens and closes unpredictable and argued the behavior was not due to a design oversight after six months of development.

Papertrade also said the trader who profited overnight later returned almost all gains to the pool through new accounts and that some users agreed to reverse manipulated trades in exchange for keeping earned PAPER. The Block said it could not verify those claims, and Papertrade's own records still showed the 0x2025 wallet's withdrawals exceeding deposits by about $1.28 million.

The episode adds to concerns around liquidity exposure on crypto derivatives venues using shared pools to warehouse risk. Papertrade said its liquidity pool holds $5 million and has paid $25 million to PAPER stakers, while Hyperliquid's HLP vault has previously posted losses from large single-trader positions, including about $4 million in March 2025 and about $4.9 million in November 2025.

Our earlier article on crypto perpetual futures in Singapore explained why regulators and market participants are paying closer attention to these highly leveraged, non-expiring derivatives as they grow in popularity. We also outlined how decentralized venues such as Hyperliquid rely on smart contracts to manage collateral and liquidations without intermediaries, shifting—rather than eliminating—risk management concerns.

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