Papertrade Trader Extracts $1.28 Million Through Ether Price Trades

A trader extracted about $1.28 million from Papertrade by moving the Ether (ETH) reference price used by the Hyperliquid-linked perpetual futures platform, exposing risks in its launch-period risk controls.

The wallet bought about 6,060 ETH on Hyperliquid at 6:01 p.m. ET on Oct. 10, lifting the price by roughly $3, then sold about 5,210 ETH minutes later as the price fell by about $3.50. The wallet withdrew $1.54 million from Papertrade shortly afterward.

Later that evening, the same wallet opened 30 Ether short positions at 660 times leverage, with a combined notional value of about $297 million. It then sold roughly 6,590 ETH on Hyperliquid, pushing the reference price to $2,504.40. The positions were liquidated more than three hours later at $2,509.95, generating a loss of about $450,000 and minting roughly 17.6 million PAPER tokens.

Papertrade said its open-interest limits had been set unusually high to handle demand during launch and that it was tightening those limits on-chain and through its relay layer. Its account records showed deposits of about $1.2 million and withdrawals of roughly $2.48 million. Papertrade also said the trader later returned nearly all of the gains through a new account, but that claim was not reflected in the recorded withdrawal balance.