A trader earned about $1.28 million on Papertrade, a high-leverage perpetuals exchange built on Hyperliquid, within hours of its Saturday launch.

X users flagged manipulation, and one account provided a breakdown of the trades; speculation arose that Papertrade blocked closures or reversed manipulated trades, though verification was not possible.

The wallet opened 30 ETH shorts at 660x leverage and amassed a notional value of $297 million, but those shorts were liquidated later at a loss of about $450,000, generating roughly 17.6 million PAPER tokens for the wallet.

Papertrade’s liquidity pool holds around $5 million and has paid $25 million to PAPER stakers; Hyperliquid’s vaults have previously recorded large losses from similar big-position events.

The Block sought comment from Papertrade and Hyperliquid on the incident.

Papertrade stated it tightened open-interest caps both on-chain and at the relayer level after the manipulation, citing launch-day looseness as a contributing factor.

The implicated wallet conducted large ETH trades on Hyperliquid to move the reference price, executing significant buying and later selling within minutes on Saturday evening.

Papertrade’s portfolio showed $1.28 million in profit on $3.18 billion in volume, with about $2.48 million withdrawn and $1.2 million deposited; a large withdrawal of $1.54 million occurred at 6:06 p.m. ET.

Papertrade claims the overnight manipulation attempts were not an oversight in design and notes the possibility of unpredictable timing due to the launch queue; some users reportedly swapped gains for keeping PAPER tokens.

At 1,000x leverage, even small price moves can wipe out margins; the wallet traded roughly $231 million worth of ETH and paid about $52,000 in trading fees on Hyperliquid that session.

Papertrade allows up to 1,000x leverage and uses a midpoint price from Hyperliquid with a shared USDC pool to take the opposite side of trades; profitable traders receive PAPER tokens.