Incident Overview
On April 9, 2026, Hyperliquid's HLP vault lost $1.5M when an attacker built a $15M Fartcoin long position across 4 wallets, then intentionally got liquidated during low liquidity. This forced the platform's ADL system to dump the toxic position onto HLP while the attacker likely profited through hedges on other exchanges.
The attacker accumulated a $15M Fartcoin position using 145.24M tokens distributed across four separate wallets. Once the position was established, they monitored market conditions and waited for a period of reduced liquidity. At that point, they allowed the position to be liquidated rather than managing it properly.
Hyperliquid uses an Auto-Deleveraging mechanism to handle liquidations when market liquidity is insufficient to close positions normally. The system transfers these positions to the HLP vault to prevent cascading failures. In this case, the ADL system activated and transferred the entire Fartcoin position plus associated bad debt to HLP. The vault recorded $1.5M in actual losses over 24 hours, with total exposure reaching $3M on paper.
The attack structure suggests the attacker opened offsetting short positions on external exchanges before initiating the liquidation. This would have allowed them to profit from Fartcoin price movements on other platforms while forcing HLP to absorb losses on Hyperliquid.
Incident Report
Protocol Information
What the Attacker Needed to Succeed
Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.
What Auditors Should Check
If you're auditing a protocol with similar architecture to Hyperliquid, these are the critical security checks that could have prevented this incident (April 2026).
- Verify all logic paths related to Other are guarded by proper access controls and input validation
- Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs
Master these auditing techniques with hands-on labs and real exploit scenarios in the Smart Contract Hacking course.
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