Shortly after the perpetuals exchange debuted on Saturday, a trader secured roughly USD 1.28 million on Papertrade. Built on Hyperliquid, the platform provides up to 1,000x leverage. An analysis of platform records and trading data by The Block indicates that the trader manipulated ETH prices on Hyperliquid before cashing out positions on Papertrade.
Trader Uses Hyperliquid Trades to Move ETH Prices
Papertrade launched at 10 a.m. ET on Saturday utilizing HyperEVM, the smart contract layer associated with the Hyperliquid blockchain. The exchange prices transactions based on the midpoint between Hyperliquid’s best bid and offer, while a shared USDC pool takes the opposing side of every position.
This pool draws its funding from trader losses, whereas losing traders are compensated with the platform’s PAPER token. Consequently, this architecture enabled the participant to profit from external price shifts on Hyperliquid while maintaining active positions on Papertrade.
The trader used wallet 0x2025…840e to carry out a sequence of transactions across both networks. By opening substantial positions on Papertrade prior to buying or selling thousands of ETH on Hyperliquid, the wallet successfully shifted the reference price utilized by Papertrade.
On Saturday between 6:01 p.m. and 6:02 p.m. ET, the wallet acquired roughly 6,060 ETH on Hyperliquid, driving the price upward by about USD 3, or 0.12%. By 6:03 p.m., the wallet unloaded around 5,210 ETH, pushing the price back down by roughly USD 3.50.
Given 1,000x leverage, a mere 0.1% price movement is enough to obliterate the margin supporting a position. Throughout that evening, the wallet traded an estimated USD 231 million in ETH on Hyperliquid, incurring roughly USD 52,000 in transaction fees.
USD 1.28 Million in Profit and a USD 450,000 Loss
Data from Papertrade’s portfolio interface revealed that the wallet accumulated roughly USD 1.28 million in profit across USD 3.18 billion in trading volume. Meanwhile, withdrawal histories showed approximately USD 2.48 million taken out against a total deposit of USD 1.2 million.
A single withdrawal of USD 1.54 million was executed by the wallet at 6:06 p.m. ET on Saturday, highlighting a significant net outflow during the timeframe captured in the platform’s logs.
Later that evening at 7:13 p.m. ET, the participant initiated 30 ETH short positions utilizing 660x leverage. These positions carried an aggregate notional value of USD 297 million. Over the subsequent three minutes, the wallet dumped approximately 6,590 ETH on Hyperliquid, depressing the price to USD 2,504.40.
In contrast to the earlier trades, these short positions remained active for over three hours. They were ultimately liquidated by Papertrade at 10:31 p.m. ET when ETH climbed to USD 2,509.95, resulting in an approximate loss of USD 450,000 for the trader.
According to Papertrade’s interface, these losses generated about 17.6 million PAPER tokens for the wallet. The extended duration of the position also sparked debate on X regarding whether the exchange had blocked the trader from closing out the trades.
X user Boblob initially flagged suspicious behavior involving a pair of wallets shifting ETH on Hyperliquid via trades valued at roughly USD 20 million each. Shortly after, another user named butler shared the specific wallet address along with a detailed breakdown of its transaction history.
The Block could not independently substantiate Papertrade’s assertion that the trader subsequently handed back nearly all of the profits through alternative accounts. Similarly, unverified claims circulated that certain users agreed to reverse manipulated trades in exchange for keeping their PAPER tokens.
Papertrade Tightens Position Limits After Launch
Papertrade addressed the episode via an X post on Sunday morning, explaining that open-interest caps had been intentionally relaxed to handle launch-day demand. The platform subsequently began tightening those restrictions both onchain and at the relayer level.
The exchange also noted that its launch queue made the exact timing of when positions were opened or closed unpredictable, creating conditions that allowed participants to attempt manipulation involving both BTC and ETH.
Although the protocol reported holding USD 5 million in liquidity reserves alongside USD 25 million distributed to PAPER stakers, a chart shared in the update illustrated the pool balance plunging from roughly USD 5 million down to USD 2.4 million before staging a recovery.
Co-founded by traders Jez and Blurr, Papertrade faced heavy scrutiny over how its pricing mechanisms and position restrictions managed large orders during its opening hours.
Read More: Apeing Presale Gains Traction as BCH, Hyperliquid Move
The wallet in question also possessed an extensive trading background on Hyperliquid, boasting roughly USD 14.2 billion in volume and USD 13.1 million in profits on that exchange after starting operations in February 2025 with an initial deposit of about USD 2 million.
In the week leading up to Papertrade’s debut, the same wallet engaged in daily trading across ETH, ZEC, NEAR, and stock-linked perpetual contracts tied to firms such as CrowdStrike and Intel.
Past incidents involving Hyperliquid’s liquidity vaults have also demonstrated vulnerabilities to large leveraged positions. Its HLP vault dropped roughly USD 4 million following the liquidation of an ETH whale in March 2025, and suffered a further USD 4.9 million loss tied to a POPCAT position in November 2025, forcing Hyperliquid to temporarily halt deposits and withdrawals.
Conclusion:
By pairing high-leverage positions with massive ETH trades on Hyperliquid, the trader reaped roughly USD 1.28 million on Papertrade. The activity prompted public backlash and forced Papertrade to tighten its position limits, though The Block has not verified the platform’s assertions that the profits were subsequently returned.
