Hyperliquid’s HyperVault Project Rugged for $3.6M, Devs Disappear

HyperVault developers have executed a rug pull on their Hyperliquid-based DeFi platform, draining approximately $3.6 million in user funds before disappearing and deleting all social media accounts.

PeckShieldAlert first detected abnormal withdrawals from the yield protocol, with funds being bridged from Hyperliquid to Ethereum and converted to ETH.

Tornado Cash Conceals $3.6M Trail as Social Accounts Vanish

The stolen funds followed a familiar pattern, with 752 ETH deposited into Tornado Cash to obscure transaction trails.

HyperVault’s official Twitter account now displays “this account doesn’t exist,” while their Discord server has also vanished.

Unfortunately, early alerts were raised on September 4 when community member HypingBull shared on X concerns about the project’s claimed security audits, but were ignored.

When HyperVault developers stated that audits were “pending via Spearbit, Pashov, and Code4rena,” an investigation revealed that none of these firms had been involved in the project.

The scam adds pressure to Hyperliquid’s ecosystem as HYPE token faces intense competition from ASTER DEX, which recently processed over $13 billion in daily perpetual futures volume.

Arthur Hayes previously exited his entire HYPE position for $823,000 profit, citing upcoming token unlocks worth $11.9 billion starting November 29. He is now considering getting back in.

Red Flags Ignored Despite Community Warnings

HypingBull’s September 4 alert warned users about HyperVault’s suspicious audit claims, urging immediate withdrawals of funds from the protocol, which had a total value of $700,000 locked at the time.

The investigator contacted Pashov directly via Telegram, receiving confirmation that they had “never heard of the project with this name.”

Code4rena’s website also showed no pending audits for HyperVault, contradicting the developers’ public statements about comprehensive security reviews.

Despite these revelations, many users continued to deposit funds, attracted by the platform’s advertised 90% APR yields on HYPE tokens.

HYPE Maxis, such as HYPEconomist, actively promoted the protocol until the final days, posting “cooking! use the money and put it into a hypervault” on September 23.

The endorsement came just three days before the rug pull execution.

Now that they’ve successfully executed the scam, the forensic aftermath has discovered early warning signs, including the project’s lack of transparency about team identities and the suspicious absence of any legitimate audit documentation.

The high-yield promises should have also raised additional concerns given the DeFi market standards.

HyperVault’s disappearance follows a pattern of DeFi projects using attractive returns to lure victims before executing exit scams.

Just last month, CrediX Finance also executed a $4.5 million exit scam on August 8 after promising to recover stolen funds within two days.

The protocol’s team vanished after attackers, suspected to be them, gained administrative control of their multisig wallet, with all official accounts deleted and the website remaining offline since the exploit occurred.

Ecosystem Faces Growing Security and Competition Challenges

The HyperVault rug pull compounds existing pressure on Hyperliquid as ASTER DEX gained significant ground in perpetual trading volume.

ASTER’s Trust Wallet integration provides 100 million users with direct access to perpetual contracts, challenging Hyperliquid’s market dominance.

Previous exploits have tested Hyperliquid’s infrastructure, including the March JELLY token manipulation that cost the platform’s vault $13.5 million.

A trader used leveraged positions and artificial price pumping to exploit the automated market maker system.

Similar incidents involved traders earning profits while causing vault losses, including “ETH 50x Big Guy,” who netted $1.8 million profit while the vault lost $4 million.

These exploits led to reduced maximum leverage limits from 40x to 25x for major cryptocurrencies.

Technical issues have also plagued the platform, including a 37-minute trading outage in July due to an API server overload caused by a surge in traffic.

The downtime caused price divergences as traders were unable to close positions during the halt.

For now, it is uncertain how HYPE’s price will react to this; however, with Arthur Hayes now polling followers about re-entering HYPE after the token dropped 23% weekly to $35.50.

He has restored optimism after being one of the factors that contributed to its downtrend when he sold all his position, citing massive upcoming token unlocks that could create $500 million monthly sell pressure.

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