Papertrade Faces Price Manipulation Claims Over ETH Trades

Decentralized trading platform Papertrade has faced allegations of price manipulation after two cryptocurrency wallets reportedly used trades worth around $20 million on Hyperliquid to move Ethereum prices by 0.1% to 0.2% while holding large positions.

According to CryptoNews, cryptocurrency trader Run reported the concerns on October 11 after X user Boblob claimed that two wallets were exploiting a weakness in Papertrade’s pricing system. The allegations involve large Ether trades on Hyperliquid and corresponding leveraged positions on Papertrade, which uses Hyperliquid’s order book midpoint pricing for synthetic trades settled against its liquidity pool.

Pricing System Vulnerability Claims

Boblob claimed that two wallets executed trades worth approximately $20 million each on Hyperliquid, briefly moving ETH prices by 10 to 20 basis points. Simultaneously, the wallets reportedly established long positions on Papertrade with a combined nominal value reaching hundreds of millions of dollars.

Papertrade’s official documentation explains that its smart contracts read the midpoint between the best bid and best offer on Hyperliquid to determine entry and exit prices. The platform offers leverage of up to 1,000 times on supported markets without conventional order-book slippage or funding payments.

Hyperliquid Safeguards and Unconfirmed Claims

Papertrade’s published risk disclosures identify possible manipulation of the best bid and offer as an unresolved concern, noting that a trader could potentially influence the midpoint by placing an order at a new best bid or offer without it being executed.

However, the platform's documentation describes using order book midpoints differently from Hyperliquid's native perpetual futures pricing, which uses separate oracle and mark prices to reduce the effect of abnormal trading activity. According to the initial reports published on October 11, neither the alleged manipulation nor any resulting losses have been independently verified.

Key facts

• Two wallets reportedly executed trades worth around $20 million of Ether on Hyperliquid.
• Reported trades moved ETH prices by 10 to 20 basis points, representing changes of 0.1% to 0.2%.
• Papertrade uses Hyperliquid order book midpoint pricing for synthetic trades settled against its liquidity pool.
• Claims emerged on October 11 via X user Boblob and crypto trader Run.