Sudden Surge in XPL Premarket Price Leads to $17 Million in Liquidations

Exchange announced new protective mechanisms against manipulation.

The decentralized exchange Hyperliquid announced the introduction of new protective mechanisms following a sharp increase in the premarket price of the XPL token. The incident resulted in mass liquidations exceeding $17 million. 

The upcoming network update on the platform will include: 

• price limit — the maximum contract price of hyperp will be capped at 10 times the eight-hour EMA to protect short traders;
• external data integration — the price calculation formula will begin using information from other markets (such as Binance’s premarket platform) to enhance resistance to manipulation.

What Happened with XPL? 

XPL is a yet-to-be-launched token of the stablecoin project Plasma, supported by the Bitfinex exchange. At the end of July, the platform’s team completed a public coin sale, raising $373 million. 

Later, several exchanges launched XPL premarket trading. On August 26, the XPL/USD contract price on Hyperliquid surged 2.5 times, peaking at around $1.8, while on platforms like Binance, the rate was $0.55.

The sharp rise was followed by a correction, triggering mass trader liquidations exceeding $17 million, according to CoinGlass.

According to Spot On Chain analysts, the surge was caused by four large addresses that fully purchased XPL sell orders, collectively earning over $46 million. 

🚨💥 Whale manipulation on #Hyperliquid sent $XPL soaring 200% to $1.80 in minutes earlier today, marking one of the wildest short squeezes and wealth redistributions we’ve seen!

Here’s the breakdown:

Manipulators’ profits:
🔹 0xb9c (main orchestrator): +$15.11M
🔹 0xe41:… pic.twitter.com/KiWDybLJj9

— Spot On Chain (@spotonchain) August 27, 2025

On-chain analyst known as MLM noted that one of the wallets involved in the manipulation is allegedly linked to TRON founder Justin Sun. 

This wallet, presumed to be associated with Justin Sun, just longed millions of $XPL on Hyperliquid, clearing the entire order book and liquidating everyone.

He then started closing his long, making $16M in just one minute. $XPL pumped to $1.80, which is over 200% in 2 minutes… pic.twitter.com/o1x1AdCLeE

— MLM (@mlmabc) August 26, 2025

According to him, this address opened a long position on XPL, bought up all orders in the order book, and liquidated traders. 

“He then began closing his position, earning $16 million in just one minute. The XPL price soared to $1.8, which means a rise of over 200% in two minutes. He still holds a long on 15.2 million XPL ($10.2 million),” wrote MLM. 

Community and Hyperliquid’s Reaction 

Users criticized Hyperliquid. Spot On Chain analysts highlighted that in just a few months, whales have repeatedly exploited vulnerabilities in the HLP to manipulate coin prices on the platform, knocking out traders’ positions.  

Community member RozeFi noted that such incidents could severely damage the exchange’s reputation. 

𓅭 The bigger risk

✥ If Hyperliquid keeps allowing unchecked games like the XPL pump, confidence in its premarket model could collapse

✥ One more repeat, and HL may be written off as a casino, not an exchange

✥ Until then, retail remains bait for whales with deeper pockets…

— RozeFi (@DeFiRoze) August 27, 2025

“If Hyperliquid continues to allow unchecked manipulations like the XPL pump, confidence in its premarket model could collapse. One more such incident, and [the platform] may be written off as a casino, not an exchange,” she wrote. 

Others defended the platform. They argued that the team acted within the rules and is not obligated to intervene or compensate for losses.

Hyperliquid representatives emphasized that the blockchain and liquidation system operated correctly — without technical failures. Initially, forced position closures were conducted through the order book, but due to insufficient margin for some traders, the exchange switched to the ADL mechanism. 

Developers also noted that the liquidations only affected the XPL market. The protocol did not incur any losses.

“Premarket markets are inherently unpredictable. Our algorithm deliberately delayed its response to avoid reacting to instant spikes and give the market time to stabilize,” they added. 

Back in late July, Hyperliquid experienced a disruption due to a traffic surge. Later, the exchange compensated affected users with nearly $2 million.