Key Notes
Hyperliquid was accused of insider trading involving HYPE token shorting.
Co-founder Iliensinc denied the allegation, but linked it to a former employee of the protocol.
The team plans on making HYPE tokens held in the protocol’s Assistance Fund system address permanently inaccessible.
Hyperliquid has linked an insider trading incident to a former employee of the firm who was dismissed more than a year ago. The company’s co-founder, Iliensinc, made sure to clarify that the actions of this individual are not a reflection of his team’s standards or values.
Hyperliquid Claims that It Has Standards
Decentralized perpetuals exchange Hyperliquid was recently accused of shorting HYPE tokens. At first, it seemed like whales were responsible for the shorting.
The so-called Hyperliquid “Leviathans” had about $3.44 billion in open positions. This comprises $1.15 billion in longs and $2.29 billion in shorts, on the perpetual exchange.
Its community members pointed out the suspicious wallet situation, but the protocol was quick to deny its involvement in such an action. Rather, Co-founder Iliensinc said on Hyperliquid’s Discord channel on Dec. 22 that it was the action of a former employee whose appointment with Hyperliquid was terminated in early 2024.
Referring to the address, Iliensinc wrote that “this individual is no longer associated with Hyperliquid Labs, and their actions do not reflect our team’s standards or values.”
Related article: Hyperliquid Team Wants to Burn $1 Billion in Protocol Assistance Fund
He went further to explain that Hyperliquid maintains a strict trading policy designed to ensure that its team operates with a “level of accountability that sets a benchmark for the industry.”
For context, the protocol’s employees and contractors are prohibited from engaging in derivatives trading that involves the HYPE token. This includes shorting or going long on the token, Iliensinc wrote.
This explanation comes weeks after one community member called cobe.hype linked the address to “one of the Hyperliquid team wallets” that sold about 4,000 HYPE tokens, equivalent to $134,000, in a single day in November.
Hyperliquid Remains Afloat amid Chaos
Amid this challenge, it is worth noting that Hyperliquid has ranked among the top-performing protocols this season. Even when it experienced a bear season alongside the broader crypto market, it was one of the few crypto entities that recovered in no time.
Almost a week ago, it hinted at making HYPE tokens held in the protocol’s Assistance Fund system address permanently inaccessible. At the time, the fund contained roughly $1 billion worth of HYPE tokens.
This action is meant to reduce the total supply of the token and ultimately catalyze a surge in HYPE price.
