Traders Locked Out As Hyperliquid Faces API Disruption During Key Market Reversal

A 27-minute API outage on Hyperliquid’s decentralized exchange left traders locked out during critical market movements, raising concerns over platform stability and transparency.

Trading Paralysis Hits Hyperliquid Users

Decentralized perpetual futures exchange Hyperliquid experienced a 27-minute outage on July 29, preventing users from executing trades, closing positions, or accessing their accounts. The disruption, which occurred between 14:20 and 14:47 UTC, stemmed from a backend API failure, effectively freezing trader activity despite continued block production on the chain.

User reports indicated widespread functionality loss across mobile and desktop interfaces. Even critical trading tools such as stop-loss orders were disabled, intensifying concerns over risk exposure during a highly volatile trading window

Outage Coincides with Concerning Activities

The incident unfolded during a significant trend reversal in the broader crypto market, adding to trader anxiety. The timing fueled speculation of either a coordinated attack or a severe internal system flaw. Some users pointed to unusual activity in funding rates just before the API malfunction, suggesting deeper underlying issues.

Notably, prominent trader James Wynn found himself trapped in an exposed long position on meme token PEPE during the outage. Despite the trading freeze, Wynn’s position saw partial liquidations, reportedly accumulating over $63,000 in unrealized losses. The episode suggested that some backend processes, including liquidation engines, continued to operate independently of user-side access.

Operational Continuity Without User Access

While Hyperliquid’s Hyperchain infrastructure remained active and block production continued uninterrupted, users had no way to interact with the protocol during the API breakdown. This created a paradoxical scenario: the chain was technically operational, but inaccessible to its participants.

Positions on Hyperliquid are settled on-chain every hour, and the inability to close or modify trades during the outage likely exposed a significant number of users to forced liquidations. The absence of a timely update from the team further aggravated concerns, with some users drawing comparisons to the opaque communication seen during the FTX collapse.

Token Impact and Community Backlash

Following the outage, Hyperliquid’s native token HYPE dropped by over 2%, falling to just above $44. As HYPE is exclusively traded on its native DEX, users had no alternative platform to mitigate losses or exit positions.

The timing of the disruption was especially notable, coming just days after Hyperliquid recorded a record-high open interest of $14.7 billion on July 23. With no official post-mortem released yet, the incident has eroded some user trust and prompted questions around the protocol’s resilience under stress.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice