A massive manipulation attempt involving the meme coin ‘Fartcoin’ led to a dramatic 50% drop in its price.
A consortium of wallets tried to inflate Fartcoin’s value on Hyperliquid, a decentralized perpetual futures exchange favored for leveraged crypto trades amid U.S.-Iran tensions. They amassed a $145.24 million long position, which disastrously unraveled within an hour on Wednesday, plummeting the token from $0.2519 to $0.1244 and resulting in approximately $3 million losses.
Launched on Pump.fun in October 2024 for 2 SOL, Fartcoin is a Solana-based memecoin with no inherent value, known for emitting digital flatulence sounds on each transaction. Despite this, it has garnered significant popularity, ranking as a top-100 token by market cap and top-10 by derivatives open interest, peaking at over $1 billion in futures exposure.
Hyperliquid’s on-chain data reveals the position’s formation and collapse. Two wallets participated: Address 0x511c bought tokens via TWAP orders to minimize market impact at around $0.248 per token, while Address 0x71c97d initiated longs at about $0.205. These actions coincided with a rally pushing Fartcoin from approximately $0.16 to $0.25 over days, potentially fueled by the position itself given the coin’s low liquidity.
It remains uncertain if the wallets were controlled by an individual or group aiming to elevate FARTCOIN prices.
The unraveling was abrupt: Address 0x511c faced complete liquidation, ending with no positions at $0.00 and losing roughly $1.45 million in liquidation value after closing a combined 28.16 million FARTCOIN and 6.7 million FARTCOIN-USD. Address 0x71c97d was liquidated twice: 29.98 million tokens at $0.1822 and 7.49 million at $0.1880, totaling about $6.87 million in losses, with only $35,074 remaining.
The massive liquidation prompted Hyperliquid’s auto-deleveraging mechanism to activate, forcibly closing profitable short positions on the opposite side of the trade to avert bad debt accumulation.
Two accounts were auto-deleveraged at $0.1929: Address 0x06ce with $15.1 million in PnL and a full short position gained $512,522 from 4.75 million FARTCOIN; Address 0x4196, holding $12.9 million in PnL and 96.44% short allocation, earned $336,599 from 15 million FARTCOIN. Neither closed voluntarily.
These sophisticated operators with multi-million dollar histories on the platform profited a combined $849,000 at no cost due to auto-deleveraging rather than trading decisions. Both were correctly positioned and compensated, albeit not by choice.
FARTCOIN was also impacted in last week’s $270 million Drift Protocol exploit, losing $4.1 million alongside USDC, wrapped bitcoin, and other assets. The token traded at $0.1244 as of Wednesday afternoon.