Hyperliquid, a new layer-1 cryptocurrency derivatives platform, has experienced a significant outflow of funds, marking its largest single-day withdrawal. This comes after security experts raised concerns regarding the platform’s potential use by hackers linked to North Korea. According to research conducted by security analyst Tay Monahan, individuals tied to the Democratic People’s Republic of Korea (DPRK) began using Hyperliquid as early as October, leading to increased scrutiny of the platform’s security measures.
Reports indicate that Hyperliquid has faced net outflows exceeding $256 million within a span of 30 hours, with a daily peak of $502.71 million in withdrawals. In contrast, inflows during this period were over $253.5 million. In response to these alarming claims, Hyperliquid acknowledged on its Discord channel that it is aware of the discussions involving DPRK-associated addresses but assured users that there has been no successful exploit of the platform and that all user funds remain secure.
In 2023, North Korean hacking groups, particularly the Lazarus Group, have successfully stolen approximately $1.3 billion in cryptocurrency, a notable increase from the previous year. This surge in cybercrime is largely seen as a strategy employed by the North Korean regime to acquire liquid assets amid stringent global sanctions. Monahan further emphasized that Hyperliquid’s setup could be vulnerable due to its centralized infrastructure, which depends on only four validators.
The news has also had adverse effects on Hyperliquid’s native token, HYPE, which plummeted 20% from a high of $35 on December 22, now trading at around $28. While some within the crypto community criticized Monahan for spreading panic, others have acknowledged her depth of knowledge in cybersecurity. Developers have suggested that there are mechanisms to mitigate potential theft of funds, including the capacity for USDC issuer Circle to blacklist problematic addresses, and the possibility of rolling back certain transactions on the Arbitrum network, although concerns about the feasibility of such actions in practice remain.
