Hyperliquid Trader Loses $21M After Private Key Breach

A trader has reportedly lost about $21 million on the decentralized exchange Hyperliquid after the user’s private key was compromised. The incident was confirmed by blockchain security firm PeckShield. This highlights the growing threat of private key thefts in the crypto industry. It has also raised new questions about digital asset security in the industry.

Attacker Drains User’s Account After Gaining Access to Trader’s Private Key

The attack began when an unauthorized user gained access to the trader’s private key, the cryptographic code that verifies wallet ownership. For context, a private key acts as the digital passcode that confirms ownership of a crypto wallet. 

Anyone who has access to this key can freely move the funds inside it. In this case, losing control of the private key gave the attacker complete access to the trader’s assets. According to onchain data shared by web3 security analysts on X, the attacker quickly moved the stolen funds from Hyperliquid to the Ethereum network. 

The haul included 17.75 million DAI, a popular stablecoin, and around 3.11 million MSYRUPUSDP tokens. PeckShield has not yet confirmed how the key was exposed, but it was noted that such breaches often occur through phishing scams, malware, or weak storage practices.

Hyperliquid Gains Attention for Speed but Faces Security Concerns

Hyperliquid has built its reputation as a decentralized derivatives exchange that focuses on speed, scalability, and efficiency. Unlike other platforms that rely on existing blockchains, Hyperliquid runs on its own custom Layer 1 network. This Layer 1 network is designed specifically to handle high-volume derivatives trading. This lets Hyperliquid process trades quickly and keep fees low. 

In fact, ARK Invest CEO Cathie Wood recently drew attention to the platform, comparing it to the Solana network during its early rise. However, the platform’s recent string of security incidents is starting to raise concerns within the crypto community.

Private Key Hacks Still Causing Big Losses in Crypto

The Hyperliquid hack adds to a growing record of high-profile crypto breaches caused by private key exposure. In 2020, the KuCoin exchange suffered one of the largest incidents in crypto history. 

Attackers gained access to its hot wallet keys, stealing more than $280 million in assets. In 2023, Multichain lost about $125 million after investigators discovered that control over critical bridge keys was too centralized. 

The trend continued in 2024 when PlayDapp lost roughly $290 million after a leaked private key allowed attackers to mint unauthorized tokens. That same year, WazirX, a leading Indian exchange, reported a $235 million loss linked to compromised wallet credentials.

According to CertiK, over $750 million worth of crypto was stolen in the third quarter of 2024 alone through phishing attacks and private key leaks. In addition, in the first half of 2025 alone, more than $2 billion worth of digital assets were stolen due to private key leaks and front-end compromises.