Trove Markets Under Investigation Following Major HYPE Token Sales Event

Trove Markets has become the center of a significant controversy following the rapid liquidation of substantial holdings in HYPE tokens over a concentrated timeframe. The decentralized perpetual exchange, built on Hyperliquid’s HIP-3 protocol infrastructure, sold approximately 194,273 HYPE tokens—valued around $10 million—raising critical questions about project governance and token management practices.

The On-Chain Evidence: Trove Markets’ Sudden Token Liquidation

The situation unfolded through documented blockchain activity, with sales originating from wallet address 0xebe07e526c4dc5f0005801bbd7d9850c424cf719. Trove Markets had previously raised $20 million to acquire 500,000 HYPE tokens, a requirement for permissionless deployment authorization under Hyperliquid’s HIP-3 framework. Initial transactions appeared modest—starting with 6,196 HYPE worth approximately $160,000 at prevailing market rates. However, activity accelerated dramatically within 24 hours, with cumulative liquidation reaching approximately $5 million before surpassing the $10 million threshold.

What intensified community concerns was the alleged timeline contradiction. The project founder publicly stated he did not control the wallet in question and requested its deactivation. Yet within minutes of this statement, the wallet resumed selling activities, ultimately reaching the full 194,272.79 HYPE liquidation figure. This sequence sparked debate within the community about whether the situation represented unauthorized wallet access or coordinated actions by internal parties.

Community Backlash: Concerns Over Transparency and Trove Markets’ Credibility

The token liquidation surfaced amid broader scrutiny of Trove Markets’ operational practices. Community members flagged several concerns: the project allegedly compensated influencers at $5,000 monthly rates for promotional activity without full disclosure, while simultaneously concealing team member backgrounds. Additional red flags emerged regarding Trove Markets’ investment decisions, specifically the deployment of liquidation proceeds into the controversial XMR1 project rather than fulfilling the intended staking obligations for HIP-3 deployment.

These developments created a narrative suggesting potential capital extraction rather than genuine protocol development commitments. The broader sentiment reflected skepticism about whether Trove Markets intended to fulfill its foundational obligations or establish a pathway for founder-aligned profiteering.

Hyperliquid Foundation Mobilizes ZachXBT Investigation

In response to mounting concerns, the Hyperliquid Foundation announced a significant step: a $254,000 donation (10,000 HYPE tokens) to blockchain investigator ZachXBT. This allocation, confirmed on-chain and representing one of ZachXBT’s largest received donations, signaled the protocol’s commitment to independent investigation. ZachXBT’s expertise in tracking crypto fraud and facilitating fund recovery positions him to provide clarity on whether the sales constituted coordinated misconduct or operational mismanagement.

Market Impact and Token Performance

The HYPE token has experienced substantial depreciation since the liquidation events. Current market data shows HYPE trading at $32.76, with 24-hour momentum declining 2.98%. The token’s overall trajectory reflects the broader market confidence erosion, with observers noting approximately 60% depreciation from initial offering valuations—creating significant exposure for early investors and raising questions about the staking mechanism’s viability.

Operational Timeline and HIP-3 Deployment Uncertainty

Trove Markets announced adjustments to its token generation event, rescheduling from 7:00 PM UTC to 4:00 PM UTC on January 19, 2026. The project cited requirements for proper execution following a platform migration to Solana and refund processing procedures. However, these operational delays coincide with uncertainty regarding whether Trove Markets maintains sufficient HYPE holdings to satisfy HIP-3 permissionless deployment requirements. Failing to meet staking obligations would prevent DEX launch and potentially leave investors without recourse.

The incident underscores structural vulnerabilities inherent in newer DeFi protocols—particularly systems involving permissionless deployment frameworks, substantial token allocations, and limited transparency mechanisms. As the ZachXBT investigation progresses, market participants are watching closely whether the Hyperliquid ecosystem’s checks and balances prove sufficient to address governance failures and restore community confidence in emerging projects launching under HIP-3 infrastructure.