In a recent interview Bybit CEO Ben Zhou shared his thoughts on how an Ether whale trade led Hyperliquid to lose $4 million. uposers today check big bets then cut position size automatically to prevent future trading losses as proposed by Zhou.
On March 12 a cryptocurrency investor boosted their 50x Hyperliquid position to generate $270 million of Ether assets from $10 million. No matter what decision he made the trader felt stuck because exiting the position would decrease its market price.
They chose to take back their invested money from Hyperliquid while selling their assets which made Hyperliquid’s Hyperliquidity Pool lose $4 million.Three Sigma stated through their audit that an exploitative bug was not at play here. Instead it was solely due to fierce liquidity management actions. Hyperliquid verified that the protocol suffered from no security flaw when this occurred.
https://twitter.com/threesigmaxyz/status/1899798137000145067
To react to this event Hyperliquid decreased the maximum leverage available for investors both in Bitcoin and Ether. The platform boosted minimal deposit rules for big positions to protect deposits before a market crash.
Hyperliquid set enhanced maintenance margins on large positions as its solution.Through his X post Ben Zhou acknowledges that CEXs deal with similar problems as Bybit.
Folks are asking me for my take on Hyperliquid Whale massive ETH position liquidation. To me, this ultimately leads to the discussion on Leverage, DEX vs CEX capabilities to offer low or high leverage. Hear me out:
Essentially what happened was a whale used Hyperliquid…
— Ben Zhou (@benbybit) March 13, 2025
The Bybit CEO demanded better risk controls to monitor market abuse equally well as traditional centralized exchanges. After liquidating the positions and releasing $4 million from HLP Vault Hyperliquid lost most of its platform investors. The March 12 data from Dune Analytics shows that the platform experienced a total withdrawal of $166 million on this specific day.
The Hyperliquid trading event demonstrates how high-leverage trades on decentralized platforms pose serious safety threats. Despite their risk reduction steps Hyperliquid needs a stronger automated system for managing trades according to Bybit CEO Ben Zhou. The crypto market requires crypto exchanges to regulate high leverage trades and make sure their liquidation systems stay robust.
