Hyperliquid Traders Left Hanging as API Glitch Locks Positions—When Tech Fails, Who Pays?

Another day, another crypto infrastructure hiccup—this time leaving Hyperliquid traders staring at frozen screens.

API Outage Sparks Trading Freeze

A brief but critical API failure on Hyperliquid locked traders into positions with zero exit options. No liquidations, no adjustments—just pure, unadulterated exposure. The platform’s status page blinked green the whole time, because nothing says ‘trust us’ like false optimism.

Who Bears the Risk When Systems Fail?

DeFi’s ‘code is law’ mantra hits a snag when the code stops working. Traders got a front-row seat to the risks of over-reliance on centralized tech stacks—even in ‘decentralized’ finance. Bonus irony: this happened while Bitcoin was mooning.

Next time your broker says ‘the system’s robust,’ remember today’s traders—stuck watching unrealized gains (or losses) pile up with no way to act. Maybe keep some analog backup plans handy.

Hyperliquid outage strikes as crypto assets turn the trend

Users are reporting outages on both mobile and PC, and are completely locked out of interactions with the protocol. Users on Discord also reported getting error messages, unable to control their DEX accounts. The problem may affect the entire DEX, with no possible orders or actions available for all users. Users reported that even stop losses were impossible, potentially wiping out value from user wallets.

getting error messages on hyperliquid on laptop and on mobile.

can’t close positions, can’t add margin. can’t cancel orders.

can’t establish a connection on mobile

i’m freaking out. anyone know what to do? help@HyperliquidX pic.twitter.com/eIQSMCJYHi

— kismet (@kismet_wtf) July 29, 2025

Despite the downtime, Hyperchain was operational and continued to produce blocks. Currently, Hyperliquid settles positions on-chain every hour, and it remains to be seen what happens with short and long positions as traders are unable to close them. Potentially, a significant number of positions were at risk of liquidation, causing chaos on the market. 

The Hyperliquid outage arrived as BTC shifted direction, sinking under $118,000. A downturn WOULD liquidate some of the open positions. 

Following the news of the outage, HYPE was still trading at $43.69. The asset relies mostly on its native DEX, with no chance to immediately trade or short. The Hyperliquid team has still not explained the nature of the attack.

Over 500K accounts were affected

While Hyperliquid boasts of being decentralized, the API outage and lack of frontend access meant over 500K accounts may be affected. The short episode raised the issue of depending on a single point of failure, even if the perps DEX settled all trades on-chain. 

Until Hyperliquid recovered full service, around $538M in net deposited funds were stuck on the exchange, based on DeFi Llama liquidity data. 

During the outage, one of the most prominent Hyperliquid whales, James Wynn, was caught in another risky long position. Wynn bet on PEPE, expecting the meme token’s recovery. Despite the general Hyperliquid trading outage, the position went through partial liquidations. 

The Pepe long position carries over $63K in unrealized losses, which were updated during the outage. Wynn was also partially liquidated several times, suggesting other positions may have been affected outside the control of their holders.

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