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A trader made about USD 1.28 million on Papertrade shortly after the perpetuals exchange launched on Saturday. The platform operates on Hyperliquid and offers leverage of up to 1,000 times. The trader moved ETH prices on Hyperliquid before closing positions on Papertrade, according to The Block’s analysis of trading data and platform records.
Papertrade launched at 10 a.m. ET on Saturday through HyperEVM, the smart contract layer of the Hyperliquid blockchain. Its system prices trades at the midpoint between Hyperliquid’s best bid and offer. Meanwhile, a shared USDC pool takes the opposite side of each position.
The pool receives funding from trader losses, while losing traders earn the platform’s PAPER token. This structure allowed the trader to benefit from price movements on Hyperliquid while holding positions on Papertrade.
The trader used wallet 0x2025...840e to execute repeated trades across both platforms. The wallet opened large Papertrade positions before buying or selling thousands of ETH on Hyperliquid. Those transactions moved the reference price used by Papertrade.
Between 6:01 p.m. and 6:02 p.m. ET on Saturday, the wallet bought approximately 6,060 ETH on Hyperliquid. The price rose by about USD 3, or 0.12%. At 6:03 p.m., the wallet sold around 5,210 ETH, pushing the price down by approximately USD 3.50.
At 1,000x leverage, a price movement of just 0.1% can wipe out the margin backing a position. The wallet traded roughly USD 231 million worth of ETH on Hyperliquid that evening and paid about USD 52,000 in trading fees.
Papertrade’s portfolio interface showed that the wallet generated approximately USD 1.28 million in profit from USD 3.18 billion in volume. Its withdrawal records showed about USD 2.48 million withdrawn against USD 1.2 million deposited.
The wallet made a single USD 1.54 million withdrawal at 6:06 p.m. ET on Saturday. These figures indicated a substantial net withdrawal during the period covered by the platform’s records.
Later, at 7:13 p.m. ET, the trader opened 30 ETH short positions at 660x leverage. The positions had a combined notional value of USD 297 million. Over the following three minutes, the wallet sold approximately 6,590 ETH on Hyperliquid, driving the price down to USD 2,504.40.
Unlike the earlier trades, these short positions remained open for more than three hours. Papertrade liquidated them at 10:31 p.m. ET, when ETH reached USD 2,509.95. The trader lost approximately USD 450,000 on the positions.
Papertrade’s interface showed that the losses generated about 17.6 million PAPER tokens for the wallet. The prolonged position also prompted speculation among X users about whether the platform had restricted the trader’s ability to close the trades.
X user Boblob first flagged activity involving two wallets moving ETH on Hyperliquid with trades worth approximately USD 20 million each. Later, another user, butler, published the wallet address and a breakdown of its transactions.
The Block could not verify Papertrade’s claim that the trader later returned almost all the gains through new accounts. The publication also could not verify claims that some users agreed to reverse manipulated trades in exchange for retaining their PAPER tokens.
Papertrade addressed the incident in an X post on Sunday morning. The platform said it had set open-interest caps loosely to accommodate launch demand. It then began tightening those limits both onchain and at the relayer level.
The exchange also said its launch queue made the timing of position openings and closures unpredictable. According to Papertrade, these conditions allowed traders to attempt manipulation involving BTC and ETH.
The protocol reported USD 5 million in liquidity reserves and USD 25 million in payments to PAPER stakers. However, a chart included in its post showed the pool balance falling from roughly USD 5 million to USD 2.4 million before recovering.
Papertrade was co-founded by two traders known as Jez and Blurr. The incident raised questions about how the platform’s pricing mechanism and position limits handled large trades during its initial hours.
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The wallet also had a substantial trading history on Hyperliquid. It recorded approximately USD 14.2 billion in volume and USD 13.1 million in profit on that platform. It began trading there in February 2025 with about USD 2 million in deposits.
During the week before Papertrade launched, the wallet traded daily across ETH, ZEC, NEAR and stock-linked perpetual contracts tied to companies including CrowdStrike and Intel.
Hyperliquid’s own liquidity vault has also recorded losses from large leveraged positions. Its HLP vault lost about USD 4 million following a whale’s ETH liquidation in March 2025. In November 2025, it lost approximately USD 4.9 million on a POPCAT position, prompting Hyperliquid to pause deposits and withdrawals.
The trader made approximately USD 1.28 million on Papertrade by combining leveraged positions with large ETH trades on Hyperliquid. Papertrade responded by tightening position limits after the activity attracted public attention. Its claims about returned gains remain unverified by The Block.
