DeFi’s Unregulated Frontier: Hypervault Disappears with $3.6 Million via Tornado Cash
- Hypervault, a DeFi platform on Hyperliquid, lost $3.6M in a rug pull as funds were moved to Tornado Cash. - The scam exploited unaudited smart contracts and false security claims, ignoring community warnings about unverified audits. - HYPE token prices dropped 23% post-incident, intensifying scrutiny over Hyperliquid's governance and DeFi's audit-free risks. - Similar cases like MetaYield's $290M loss highlight systemic fraud risks in unregulated DeFi ecosystems using privacy tools.
Hypervault, a DeFi application built on the Hyperliquid blockchain, has recently suffered a major rug pull, leading to user losses totaling $3.6 million. The event, which took place in late September 2025, saw 752 ETH (valued at close to $3 million) abruptly moved to Tornado Cash, a crypto mixer focused on privacy DeFi Platform Hypervault Goes Offline Following $3.6M Rugpull [ 1 ]. Blockchain investigators, such as PeckShield, traced these withdrawals to a planned exit scam, with assets first transferred from Hyperliquid to
This rug pull mirrored several warning signs, such as the use of unaudited smart contracts and deceptive statements about security checks. The Hypervault team had previously claimed that audits were underway with firms like Spearbit, Pashov, and Code4rena, but investigations found no proof of any such audits Hyperliquid faces $3.6M HyperVault loss tied to Tornado Cash [ 2 ]. Community alerts, including a September 4 warning from HypingBull, were disregarded even after it was confirmed that Pashov was not involved Hyperliquid faces $3.6M HyperVault loss tied to Tornado Cash [ 2 ]. The project also advertised extremely high returns, such as 90% APRs on HYPE tokens, which drew in investors despite the evident risks Hyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear [ 4 ].
By sending the stolen funds to Tornado Cash, the perpetrators made tracking and recovery nearly impossible. The use of the mixer, along with the removal of official channels, has led to increased skepticism about the platform’s authenticity. PeckShield pointed out that the transactions had all the hallmarks of a typical rug pull, including draining liquidity and a 98% crash in the token’s value HyperVault Triggers Rug Pull Alarm as $3.6M Disappears … [ 3 ]. This event has also brought renewed attention to issues within the Hyperliquid ecosystem, which previously suffered a $13.5 million exploit in March 2025 due to manipulation of the JELLY token Hyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear [ 4 ].
Following the rug pull, Hyperliquid’s HYPE token has come under further selling pressure, dropping 23% in value over the week ending September 26 Hyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear [ 4 ]. The platform is now facing stiff competition from ASTER DEX, which recently surpassed $13 billion in daily perpetual futures trading volume Hyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear [ 4 ]. Arthur Hayes, a well-known crypto personality, has shown mixed feelings, polling his audience about re-investing in HYPE after selling all his holdings in August. The outlook for the token is uncertain, especially with $11.9 billion in tokens set to unlock in November, which could increase selling pressure Hyperliquid's HyperVault Project Rugged for $3.6M, Devs Disappear [ 4 ].
The Hypervault case highlights the inherent dangers in DeFi, where unregulated projects often entice users with promises of high yields while hiding significant risks. Experts point out that the reliance on unaudited code and privacy tools like Tornado Cash fosters an environment where exit scams are common. Other notable incidents, such as MetaYield Farm’s $290 million loss in February 2025 and
Now, Hyperliquid and its community are under mounting pressure to improve governance and transparency. Security firms like PeckShield are urging for public audits, compensation plans, and stricter oversight to restore confidence. Meanwhile, affected users are seeking legal counsel to pursue possible recovery, though the use of Tornado Cash complicates legal proceedings Hyperliquid faces $3.6M HyperVault loss tied to Tornado Cash [ 2 ]. The situation has also heightened regulatory concerns, as cross-border transactions and the use of mixers have drawn attention from authorities such as the U.S. Department of Justice Hyperliquid faces $3.6M HyperVault loss tied to Tornado Cash [ 2 ].
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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