XPL Flash Crash Investigation: 16 Wallets Withdraw $2.0386 Million Margin, HLP Losses 55.6%

On November 1, XPL experienced a flash crash on Hyperliquid, with 16 associated wallets withdrawing approximately $2.0386 million in margin before the price plummeted, leading to HLP taking over a large number of XPL long positions from the liquidation treasury. HLP ultimately took over about 160 million XPL and completed the sale in approximately 75 minutes, incurring a loss of about $555,787, which is equivalent to 55.6% of the liquidation treasury's own funds. The investigation revealed that 14 of the 16 wallets had connections in terms of funding sources or trading activities, with 12 wallets withdrawing funds in advance, contributing to 90.7% of the positions taken over by HLP. The investigation found no direct evidence that these wallets caused the XPL crash, nor could it confirm whether they hedged on other trading platforms. The 16 wallets did not profit from this incident on Hyperliquid, collectively losing about $711,000. Additionally, XPL had already dropped about 6% before the first liquidation occurred, indicating that the liquidation was not the starting point of this crash, and the initial active selling volume on Binance's perpetual contracts was significantly larger.

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