$120 million evaporated: Justin Sun, $XPL manipulation incident and Hyperliquid trust crisis

Event Background

Justin Sun — a Chinese crypto entrepreneur, rose to fame for founding TRON. He has long been surrounded by controversies such as “Ponzi schemes and pump-and-dump” in the industry, but at the same time, he often leverages capital and influence to enter new projects.

Recently, his name has once again been linked to the Hyperliquid platform and the $XPL token manipulation incident.

$XPL Manipulation Process

It was not Justin Sun’s direct wallet, but on-chain evidence shows a high correlation with him.

He first pushed up $XPL by 200% with large funds, creating a surge.

This move instantly liquidated all short positions, causing traders to suffer heavy losses.

In this artificially induced volatility, he profited about $16 million, while market participants collectively lost over $120 million.

Past Precedent: $WLFI

In fact, this is not an isolated incident. Previously, Justin Sun had played out the same scenario with $WLFI:

First, a large investment (pushing holdings from $30 million to $75 million)

Pushing up the price by controlling liquidity, then quickly pulling back

Ultimately causing a large number of following investors to be liquidated

Whether it’s $XPL or $WLFI, this “whale manipulation + thin liquidity” model almost guarantees the outcome:

Retail investors lose, whales profit.

Why Does This Happen?

Hyperliquid’s liquidity is extremely thin, with insufficient depth to withstand large orders

A single player’s massive trading volume directly dominates price trends

After IDO, the market generally has hedged short positions, becoming liquidation targets

Market makers react slowly, failing to buffer extreme volatility in time

In such an environment, manipulation is almost unstoppable.

Impact on Hyperliquid

Hyperliquid has always touted itself as a “fair pre-market platform,” but this incident has severely damaged its reputation:

Traders are demanding compensation from the platform, but the official response remains unclear

The entire Web3 community is questioning its risk control mechanisms and governance capabilities

Even though Hyperliquid was not directly involved, it is seen as both a victim and an accomplice due to its lack of preventive measures

Industry Lessons

This incident once again demonstrates:

Web3 still cannot avoid the manipulation tricks of traditional financial markets

Big players can still destroy the market with a single move, profiting at the expense of others

The only defense remains:

Diversified investment

Risk management

Disciplined stop-loss

The market is ruthless: the weak are eliminated, the strong survive.

Conclusion

Justin Sun has once again proven his consistent style — profiting at the expense of others’ losses.

This $XPL incident not only evaporated over $120 million in funds, but also severely damaged Hyperliquid’s reputation. Whether the platform can regain trust in the future remains unknown.

For investors, the real lesson is:

In the crypto market, do not overly rely on a platform’s “fairness,” because risks often hide where you least expect them.

Only calm, diversified, and strict risk control can prevent you from becoming the next victim in a manipulation incident.