Plasma's XPL token fell 18% in one minute on Hyperliquid on Nov. 1 after a group of 16 wallets accumulated a large leveraged long position, withdrew much of their available margin, and entered liquidation as selling accelerated across venues. Hyperliquid's HLP liquidator vault assumed up to 160 million XPL during the cascade and ultimately recorded a $555,800 loss after closing the position about 75 minutes later.
The episode began at 12:32 Beijing time, when XPL dropped sharply while Bitcoin declined only 0.04% over the same minute. Hyperliquid's first liquidation came at 12:32:43, after XPL had already fallen roughly 6% on both Hyperliquid and Binance, according to a reconstruction by on-chain analysts kenni.hl and Naeven. That sequence places the initial price slide ahead of Hyperliquid's forced-selling process, although liquidations became a major source of trading volume once they began.
The analysts identified a group of wallets that collectively held about 269 million XPL, valued at $23.09 million, shortly before the decline. The accounts had built their exposure through synchronized time-weighted average price, or TWAP, buy orders and then removed funds from Hyperliquid in the minutes before the liquidation cascade.
Margin withdrawals left accounts close to liquidation thresholds
Twelve wallets made 20 successful withdrawals totaling $2.039 million, with the first large withdrawal settling at 12:24:47 and the final completed withdrawal arriving at 12:32:11. The analysts said seven other withdrawal attempts failed because of insufficient balance, showing several wallets repeatedly adjusted requested amounts after their initial requests were rejected.
The withdrawals reduced the group's equity-to-notional ratio from 22.4% to 13.5%. Among the 12 accounts that withdrew, 10 finished with margin ratios between 9.9% and 11.2%, placing them close to the minimum capital needed to support their positions.
Hyperliquid permits traders to withdraw unrealized profit while retaining at least 10% of a position's notional value as margin. The group had accumulated an estimated $2.475 million in unrealized gains at an average entry price of $0.07669 when XPL reached $0.0859, according to kenni.hl and Naeven.
The accounts continued buying after funds began leaving the platform. In the final 30 minutes before the drop, the wallets bought 15.2256 million XPL, more than half of the 29.5313 million XPL traded across Hyperliquid's order book over that period. That activity left the group heavily exposed to even a modest price reversal.
Wallet links point to coordinated trading behavior
Fourteen of the 16 wallets could be traced through four distinct USDC funding trees on Arbitrum, the analysts said. The funding trees did not send assets directly to each other, but their recipient wallets used matching order instructions and closely aligned timing.
Ten of the 16 wallets also used the same Hyperliquid referral code. Among 54 other accounts liquidated in the event, only one used that referral code, while none of those outside accounts withdrew funds in the three hours before the crash, according to the review.
The deposits followed a staged pattern. On Sept. 12, two wallets received $797,334 and $624,954 within 46 seconds, while a third received $743,730 later that day. On Oct. 29 and 30, those wallets distributed USDC to nine additional accounts. A fourth source wallet, identified as 0x3f42...9bf5, funded another address on Oct. 31, and most recipients deposited to Hyperliquid within an hour.
Two more wallets lacked a direct funding connection but displayed similar behavior. Starting at 11:45, 10 wallets made small test withdrawals ranging from $501 to $1,185 within six minutes. Four additional wallets began similar test withdrawals from 12:12.
From 12:22 to 12:28, 11 wallets across the four funding trees placed TWAP buy orders in two rounds. The first targeted roughly $300,000 of XPL purchases over 60 minutes, followed by approximately $200,000 over 15 minutes. Three orders were identical at 3,502,136 XPL each.
Position splitting reduced capital demands
The group's exposure was spread across 16 accounts, with no individual position exceeding $2.3731 million. That kept each wallet below Hyperliquid's $3 million notional threshold for 10x leverage.
The account structure also reduced the maintenance margin required to maintain the broader position. The analysts calculated that a single $23 million position would have needed about $2.159 million in maintenance margin. Split among the 16 wallets, the same total exposure required roughly $1.155 million.
Since Oct. 28, XPL open interest had increased by 281 million tokens on a one-way basis. The group's 269 million XPL long position was close to the full increase, suggesting the accounts accounted for much of the additional directional exposure built during that period.
The strategy did not produce a net gain for the wallets on Hyperliquid. Total deposits into the platform reached $3.21 million, while total withdrawals were $2.33 million, excluding $243,350 transferred between wallets. About $165,775 remained on the platform, largely connected to an open position held by 0xd6e2...423d. The analysts calculated the group's combined Hyperliquid loss at about $711,000.
HLP assumed the largest portion of the liquidation
Hyperliquid's liquidation system initially sends 20% of a large position to the order book, a step observed on 11 of the wallets. If an account's equity falls below two-thirds of its maintenance-margin requirement, the position transfers to the HLP liquidator vault.
At 12:32:50, with Hyperliquid's mark price at $0.077378, the vault took over 134 million XPL. By 12:32:59, the total had reached 160 million XPL. The HLP liquidator vault is a roughly $1 million subcomponent within Hyperliquid's broader HLP pool, according to the analysts' description of the platform's structure.
The takeover prices were below the platform's mark price, consistent with Hyperliquid's liquidation formula based on remaining account equity divided by position size. The average discount was 108 basis points. At that point, Binance's last XPL trade was $0.07408, about 4.3% below Hyperliquid's mark.
The reconstruction attributed $282,408 of the vault's loss to the difference between the takeover price and Binance pricing, including Hyperliquid's 41.5-basis-point premium to Binance before the drop. A further decline in XPL on Binance during the vault's exit added $260,258. Selling roughly 2 million XPL per minute produced $7,771 in underperformance against Binance prices, while fees added $5,218.
Hyperliquid processed 167 million XPL in trading volume during the full minute of the crash, exceeding Binance's 144 million XPL. Forced liquidations represented 49% of Hyperliquid's volume for that minute. Earlier in the decline, Binance had led activity: its perpetual market traded 49.2107 million XPL in the first 43 seconds, with 75.9% of volume initiated by sellers, compared with 11.4375 million XPL on Hyperliquid.
As of 18:30 Beijing time, HLP held $169.6 million, making the $555,800 loss equal to 0.33% of the full pool. Relative to the liquidator vault's reported principal, the loss represented 55.6%, exposing how a small sub-pool designed to absorb distressed positions can face much larger proportional drawdowns than the broader liquidity pool behind it.
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