The liquidation of an over $200 million long trade on ether (ETH) lead to a $4 million loss for Hyperliquid, where the “whale” placed the bet.

The liquidation saw wallet ‘0xf3f4’ opening a highly leveraged 50x long ETH position, depositing $4.3 million USDC as margin for a total size of 113,000 ETH.

The wallet then started withdrawing funds, reducing the margin below maintenance requirements in a move that resulted in a $1.8 million profit for the user but a $4 million loss for Hyperliquid’s Hyperliquid Provider (HLP) vault.

Vaults are a blockchain-based product on Hyperliquid where users can deposit USDC to potentially earn a share of profits generated by trading strategies of other users or the vault’s owner.

The moves created speculation among Hyperliquid users of a possible exploit of the platform, a rumor it doused in an X post.

“There was no protocol exploit or hack,” Hyperliquid said. “This user had unrealized PNL, withdrew, which lowered their margin, and was liquidated. They ended with ~$1.8M in PNL. HLP lost ~$4M over the past 24h. HLP’s all-time PNL remains at ~$60M. As a reminder, HLP is not a risk-free strategy.”

Hyperliquid added that it will update the maximum leverage for bitcoin (BTC) and ETH to 40x and 25x, respectively, to increase maintenance margin requirements for larger positions as a preventive measure for similar moves in the future.

Hyperliquid’s HLP vault still has an all-time profit of $60 million, data shows. Meanwhile, the platform’s HYPE token dropped from $14 to under $13 in a knee-jerk move after the liquidation, though it has since fully recovered the brief slide as of late Asian hours.