Cryptocurrency exchange outflows swell due to fears of North Korean traders

(Bloomberg) — Hyperliquid, a cryptocurrency derivatives trading platform, suffered its largest daily outflow ever as traders rushed to remove funds amid fears that North Korean hackers were trading on the exchange.

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Taylor Monahan, a security expert who works at digital wallet provider MetaMask, said digital wallets linked to the hackers have been trading on Hyperliquid since early October. She shared the addresses of the suspected wallets and their activities on the social media platform X on Monday. Trading is typically a way for North Korean hackers to test potential security bugs on a platform like Hyperliquid, according to Monahan.

“Hyperliquid Labs is aware of reports circulating regarding activity through supposed DPRK addresses,” according to a statement from the exchange’s core development team. “There has been no exploitation by North Korea — or any exploitation for that matter — of Hyperliquid. All user funds are accounted for.

Monahan’s posts sparked widespread controversy on social media, with some Hyperliquid supporters criticizing her for causing unnecessary panic. More than $112 million worth of the USDC stablecoin left the exchange on Monday, according to data compiled by venture capital fund Hashed on Dune Analytics. The price of HYPE, the exchange’s token, is down 20%, according to CoinGecko tracker.

Hyperliquid is a type of cryptocurrency exchange that combines the advantages of both centralized exchanges like Binance and decentralized exchanges like Uniswap. They offer some transparency similar to decentralized exchanges because they are built on their own blockchain technology. At the same time, it sacrifices some of the benefits of decentralization — where the software to maintain the blockchain ledger is run by a closed group of developers — in order to provide competitive high speeds similar to centralized exchanges.

Hyperliquid has quickly become the largest cryptocurrency exchange by trading volume in DeFi, according to data compiled by user uwusanauwu on Dune Analytics, with a daily average of $8.8 billion in the past week. The platform recently reached a record 24-hour volume of over $15 billion, according to a December 21 X post.

(Updates with statement from Hyperliquid Labs in third paragraph.)

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