Papertrade Restricts New Exposure Following Manipulation Allegations
Papertrade has imposed tighter trading limits after claims that Hyperliquid prices used by its exchange were manipulated. The restrictions affect new exposure onchain and through relayers, while existing positions can still close at a paused midpoint price. The platform offers synthetic BTC and ETH trades with up to 1000x leverage against a protocol-owned pool.
Papertrade responded to manipulation claims by curbing fresh exposure, covering both blockchain contracts and approved relayers. Existing trades can still exit at the paused midpoint, and the team attributed the issue to overly permissive launch limits rather than a confirmed wallet-specific closing ban.
Its synthetic BTC and ETH products let users take up to 1000x leverage against a protocol-owned pool, pricing off Hyperliquid's best bid-ask midpoint. Administration rests with a two-of-three multisig, while profitable payouts beyond available funds enter a queue; one cited wallet reportedly earned about $1.28 million.
The tightening may chiefly affect leveraged traders and liquidity providers tied to Papertrade's pool. By limiting new exposure, it could reduce opportunities for price manipulation, but may also constrain users seeking high-leverage BTC and ETH trades. If similar platforms adopt comparable safeguards, confidence in synthetic derivatives could improve; if not, concerns about opaque pricing and payout queues may persist. Broader crypto markets may watch whether these controls prove effective without harming ordinary users.