In a recent development, a significant amount of USDC, a popular stablecoin pegged to the US Dollar, has been transferred out of Hyperliquid, a decentralized layer 1 exchange. This platform bridges to Arbitrum, a layer 2 network built on the Ethereum blockchain. This shift was triggered by a series of posts on X (formerly known as Twitter) by prominent crypto security expert, Tayvano, popularly known as Tay.
Tayvano, in her posts, exposed concerns about the activities of hackers believed to be associated with the Democratic People’s Republic of Korea (DPRK). She highlighted the suspicious trading activities on the Hyperliquid bridge, with some addresses linked to these hackers losing over $700,000. This revelation initiated a wave of fear, uncertainty, and doubt (FUD) within the Hyperliquid community, causing a swift exodus of over $114 million in USDC from the platform.
Tayvano suggested that the loss of $700,000 from the trading addresses was no accident. Instead, she proposed it was a deliberate act by DPRK hackers to test for vulnerabilities within the platform. “Y’all, DPRK doesn’t trade. DPRK tests,” she posted.
This unsettling news comes at an unfortunate time for Hyperliquid, which recently celebrated a 24-hour trading volume of over $13 billion. This surge was largely attributed to its recent airdrop event. Ironically, the platform’s liquidity could have made it an attractive target for the hackers.
Tayvano had previously raised concerns about North Korean hackers on Hyperliquid two weeks ago, offering her assistance to the platform’s team to mitigate potential risks. Despite her warning, the Hyperliquid team has remained silent, and their token, HYPE, has seen a 20% decrease in value. Two prominent investors have liquidated almost $4 million of their assets.
Entropy Advisors on X pointed out that Hyperliquid relies on four validators. If three of them were compromised, it could lead to a loss of $2.2 billion in USDC across the bridge. Though this has not occurred, the mere possibility has triggered further anxiety among users, questioning the platform’s security.
Blockchain bridges like Hyperliquid, hailed as the future of on-chain transactions, have shown increased vulnerability to hacks, accounting for over 31% of the total value of funds lost to hacks, according to Defillama.
There’s a divide in the blockchain security community over Tayvano’s alert. Some are urging the Hyperliquid team to investigate her claims, while others accuse her of spreading FUD to undermine the platform because they refused to collaborate with her.
One X user, @PixOnChain, commented on the effect of Tayvano’s post, stating that the fear of a potential hack has wiped over $2 billion off Hyperliquid’s market cap. They added that continuous education, collaboration, and strengthened security can help combat such FUDs.
In a now-deleted post on X, Jared Grey, the “head chef” at Sushi Labs, admitted his respect for Tayvano but also expressed his belief in having an open forum to address security concerns without causing unnecessary panic among users.
The activities of DPRK government-sponsored hackers have been a significant concern in the crypto community. They reportedly amassed over $1.34 billion from their cyber activities this year alone. As these hackers continue to devise inventive ways of infiltrating crypto platforms, the need for strengthened security measures remains crucial.
