Suspicious High-Leverage Trades on Hyperliquid Spark Concerns Over Money Laundering

The popular crypto trading platform Hyperliquid (HYPE) is currently under investigation due to several high-leverage trades on Bitcoin (BTC) and Ethereum (ETH) that have raised flags regarding potential money laundering activities.

Experts have identified a disturbing trend of unusually large leveraged trades being executed with precise timing, prompting inquiries into the sources of the funds and the identities of the traders involved.

Blockchain Analytics Highlight High-Stakes Trades

The blockchain analytics firm Spotonchain has documented a series of notable leveraged trades on the Hyperliquid platform. Their analysis suggests that a well-capitalized trader made a deposit of $5.22 million to initiate highly leveraged long positions in both BTC and ETH.

This trader opened an ETH position at 50x leverage, with an entry price of $1,884.4 and a liquidation level of $1,838.2. Additionally, they established a BTC position at 20x leverage, entering at $82,003.9 and setting a liquidation target of $61,182.

Spotonchain further revealed that the same trader has a track record of executing short-term leveraged trades with a remarkable 100% win rate, generating profits of $2.2 million within just two days.

“In the past two days, this whale closed two rapid ETH long positions, achieving a 100% win rate with total profits of $2.2 million,” stated Spotonchain.

The consistent nature of these trades has led to theories indicating that this activity could resemble a sophisticated money laundering operation or insider trading.

AB Kuai Dong, a crypto market analyst, speculated that the funds utilized in these Hyperliquid trades might be connected to North Korean hackers. The analyst highlighted that North Korean cybercriminals have previously employed high-frequency trading strategies on crypto platforms as part of their laundering operations.

This theory suggests an attempt to clean illicit funds gathered from hacking, further supported by the anonymous and quick execution of the Hyperliquid trades.

“I am quite curious about these large anonymous trades on Hyperliquid. Given past reports of North Korean hackers testing Hyper transactions, could it be that these frequent and sizable 50x openings are involved in laundering gray market funds?” the analyst questioned.

Another analyst, known as Ai on X, backed this theory by referencing earlier research related to the profits from high-leverage trades on Hyperliquid. Ai noted that three addresses had collectively earned $2.53 million through GMX high-leverage trades earlier in March.

Expert Opinion: Gambling or Insider Insights?

These addresses are traced back to gambling sites such as Roobet and AlphaPo, also interacting with ChangeNOW, an exchange commonly used by hackers. Ai raised the possibility that the traders here might be expert gamblers capitalizing on potentially stolen funds in high-risk trades.

“Are these traders insiders or just skilled gamblers? The evidence leans more toward the latter,” the analyst suggested.

Crypto analyst Adolyb reinforced these concerns, citing research from Coinbase’s Conor Grogan that provided further evidence of potentially illicit behavior.

“Coinbase’s findings revealed that the relevant crypto wallet belonged to a phishing address with multiple transaction layers and was associated with gambling operators,” stated Adolyb.

According to Grogan’s analysis, the crypto wallet linked to certain suspicious trades had received funds originating from phishing schemes, characterizing the account as a “Roobet whale,” indicative of frequent high-stakes gambling on platforms known for higher risks of illicit fund flows.

Grogan noted that this trader had previously liquidated long positions just ahead of significant market shifts, suggesting that their trades were not driven by insider information but rather funded through illicit means used for gambling.

This controversy has reignited discussions around the suitability of high-leverage trading venues for such questionable financial activities. While leveraging trading magnifies profits, it also enables illicit actors to swiftly move and obscure substantial amounts of money.

Furthermore, the anonymity provided by decentralized and offshore exchanges complicates regulatory efforts to monitor and control such transactions effectively. As evidence mounts suggesting that Hyperliquid’s high-leverage trades may be rooted in unlawful origins, regulatory bodies and blockchain forensic firms are likely to increase scrutiny on these types of activities.

Recent data indicates that Hyperliquid’s token price has decreased nearly 8% since the beginning of trading on Wednesday, with HYPE currently valued at $13.35.