Hyperliquid Under Scrutiny After On-Chain Links to Ex-Employee

• Former employee linked to HYPE shorts raises fresh doubts on Hyperliquid compliance.
• Wallet trails show cross-network transfers connecting Hyperliquid, Arbitrum, and Polygon.
• Large leveraged positions contradict Hyperliquid’s zero-tolerance stance on insider trading.

Hyperliquid faces renewed scrutiny after on-chain data tied continued HYPE short positions to a former employee. The situation follows earlier enforcement actions and raises fresh concerns about compliance credibility. Consequently, market participants now question whether internal controls extend beyond public statements.

In early 2024, Hyperliquid dismissed an employee for insider trading violations. At the time, the company emphasized strict enforcement and internal discipline. However, developments in late 2025 revived attention on that same individual. Notably, Hyperliquid confirmed that a large HYPE shorting incident traced back to the former employee’s wallet.

Blockchain records show continued trading activity linked to the identified address. Hence, observers argue that enforcement may not have fully prevented ongoing participation. The 

activity occurred directly on Hyperliquid, amplifying reputational concerns.

Wallet Trail Connects Activity Across Networks

On-chain analysis shows that the wallet labeled 0x7Ae4 remains active. The Hyperliquid team previously linked this address to the former employee. Additionally, transaction history shows that the address originated from Arbitrum funding.

The Arbitrum wallet 0xA2c5a179777e5cACEb6bb9d0ceBe7e2A1826aD45 funded 0x7Ae4. Later, that same wallet transferred funds to the Polygon address 0x5a629E148f9e0a33F56ac9A7e441a70357725A27. Analysts believe this move is aligned with heavy Polymarket usage.

At that Polygon address, the Polymarket account name appears as trytings. Moreover, records show that 0x5a62 received roughly $66,000 USDC from Hyperliquid between September and November. These transfers establish a clear financial connection.

Short Positions Raise Policy Concerns

On December 17, five days before Hyperliquid’s public statement, 0x5a62 deposited $53,000 USDC into Hyperliquid. The wallet then opened multiple leveraged positions. These trades included a $180,000 HYPE short using 10x leverage. Additionally, the wallet opened a $43,000 BTC short at 40x leverage.

Total exposure reached $223,000, while the wallet retained $63,000 USDC as free margin. Consequently, analysts say the activity contradicts Hyperliquid’s zero-tolerance stance. The positions remain open, reinforcing those concerns.

Observers now urge decisive intervention from Hyperliquid. They argue that visible enforcement actions protect platform trust. Moreover, they stress that unresolved cases weaken internal governance signals. Hence, the situation tests whether Hyperliquid can fully enforce its stated standards.

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