Key Highlights
- A security researcher, Bölük, published claims alleging Hyperliquid had $362 million in unaccounted USDC, among other things.
- Hyperliquid denied the accusations with a long response on X, including insider claims of insider trading.
- The exchange emphasized transparency and decentralization, stating that all trades and balances are verifiable on-chain by anyone running a node.
Hyperliquid, a decentralized perpetual futures exchange, has come under increased scrutiny after a security researcher known as Bölük published claims questioning its solvency, decentralization, and internal controls. The allegations have triggered a wide debate in the crypto space.
The controversy started on December 20, when Bölük released a detailed technical write-up based on reverse-engineering Hyperliquid’s mainnet binary and chain state.
The report, widely shared on X, alleged that Hyperliquid had a $361 million gap between USDC held on the Arbitrum Bridge and users’ balances on HyperCore. The write-up also claimed that the platform had hidden “backdoor” functions, central control over transactions, potential governance powers to freeze the chain, and special privileges for insiders.
Claims on solvency
One of the central allegations focused on solvency. Bölük argued that the USDC visible on the Arbitrum bridge did not match the total balances users held on HyperCore, pointing to a $362 million difference.
However, Hyperliquid responded in an X post today, stating that the report failed to include native USDC issued on HyperEVM. According to the platform, public explorers show approximately $3.99 billion in bridged USDC, $362 million held in vaults, and about $59 million in native USDC, fully matching user balances. “Every dollar is accounted for,” the platform stated in its official response.
Misunderstandings on testnet functions
The report also highlighted a function called “TestnetSetYesterdayUserVlm,” which was found in the mainnet binary. Bölük claimed it could allow retroactive volume changes. Hyperliquid rejected this claim, explaining that the function exists only on the testnet and cannot be executed on the mainnet.
The exchange explained that this function allows testing of complex fee and volume interactions before deploying live. Hyperliquid added that future versions will remove these testnet-only paths to avoid any further confusion.
Bölük also raised concern about the platform being centralized. He said that only eight broadcaster addresses could submit transactions and that users were forced to route their trades through them.
Hyperliquid acknowledged that some orders currently use broadcasters but clarified that this is intended to reduce MEV (miner extractable value). The platform also added that some transactions already come directly from validators and that the upgrades in the future will expand the system to allow multiple proposers for all transactions.
CoreWriter god-mode and governance
The researcher further alleged the existence of a “CoreWriter god-mode,” which he claimed could mint tokens or move funds belonging to users without the need for signatures. Hyperliquid rejected this claim, stating that CoreWriter is a documented interface allowing smart contracts on HyperEVM to submit standard actions, like placing orders or staking, during block execution. “It has no ability to mint tokens or move user funds without authorization,” the firm said in its response, saying the claim is a misunderstanding of system design.
Governance powers were another focal point. Bölük claimed the chain could be frozen via governance with no on-chain unfreeze mechanism. Hyperliquid responded that chain freezes occur only during planned network upgrades, similar to hard forks on other blockchains, where validators adopt a new binary at a set block height.
The company also denied that the November 2025 POPCAT incident, which resulted in the platform losing about $4.9 million, caused a chain freeze. It confirmed that the L1 chain continued producing blocks and that only the Arbitrum bridge was temporarily locked due to unusual balance changes.
Clearing rumors of insider trading
Separately, Hyperliquid addressed rumors of insider trading after earlier blockchain data showed a wallet holding a short position in HYPE.
According to a previous report, the platform clarified that this position belonged to a former employee and confirmed that the individual was no longer part of the team. Hyperliquid reiterated that current staff members are prohibited from trading the HYPE token.
“Current team members are banned from trading the native token,” Hyperliquid said. The wallet in question still holds about 2.5 million HYPE from the spot market, and the short position involves only 1,000 HYPE, valued at roughly $25,140.
In its final statement, Hyperliquid said its entire state is executed by 24 permissionless validators under a Byzantine Fault Tolerant consensus model. The platform added that anyone can run a node and verify balances, trades, and system solvency independently.
Hyperliquid concluded by stating that full open-sourcing of HyperCore will follow once feature development is complete, positioning transparency as a long-term goal rather than a finished product.
Market performance
At the time of this writing, HYPE is trading near $25. According to data from Deflillama, its open interest has reached over $7 billion. The largest HYPE short position on the platform had a notional value of $45 million and was unrelated to the former employee.
Hyperliquid reported that total value locked remained near $4.15 billion, with daily trading volumes exceeding $14 billion. The platform has generated approximately $895 million in fees this year.
Also Read: HYPE Falls 60% From Peak: Why is Hyperliquid Aura Vanishing?
