Hyperliquid Halts JELLY, Offers Refunds Amid Alleged Market Manipulation

Hyperliquid experienced an estimated loss of $10.63 million due to a sudden 230% increase in $JELLY's price, resulting in the token's delisting and plans for compensating affected users.

The Hyperliquid (HYPE) treasury had automatically taken a $5 million short position in JELLY, which escalated into an unrealized loss of around $10.63 million when the token's price surged within an hour, reaching $0.16004.

If JELLY's price had approached $0.17, Hyperliquid’s treasury could have faced liquidation, potentially incurring losses of around $240 million.

The sudden price hike is believed to be a result of coordinated market manipulation. An address identified as 0xde95 reportedly opened a considerable short position of 430 million JELLY tokens on the HyperliquidX platform.

Shortly after, the same entity removed its margin, causing the liquidation of $4.5 million in short positions, which Hyperliquid’s treasury subsequently assumed. Simultaneously, a newly created wallet, 0x20e8, opened a long position in JELLY, further impacting the market.

A massive whale holding 124.6M $JELLY($4.85M) is suspected of manipulating the price of $JELLY(jellyjelly) to cause a $12M loss for the Hyperliquidity Provider (HLP)

The whale first dumped $JELLY, crashing the price and leaving HLP with a passive short position of 398M $JELLY($15.3M).

Following this, the whale bought…

Delisting $Jelly

In response to these occurrences, Hyperliquid's validator committee decided to delist JELLY from the platform. The token was force-settled at $0.0095 to prevent further losses, with Hyperliquid citing a clear exploit and the need to protect HLP users.

After noticing evidence of suspicious market activity, the validator set gathered and voted to delist JELLY perps.

All users excluding flagged addresses will be fully reimbursed from the Hyper Foundation. This will be done automatically in the coming days based on onchain data. There is no…

The platform settled impacted short positions at the original opening price of $0.0095, helping prevent additional harm. Hyperliquid confirmed that users' funds remain secure and stated that the Hyper Foundation will fully compensate users whose wallets are not flagged.

"All users apart from flagged addresses will be made whole from the Hyper Foundation."

These events initiated discussions about the platform's decentralization.

NEW 🚨

A significant issue has emerged on Hyperliquid involving $JELLY 👇

1.A trader opened a massive $6M short position on JellyJelly (a small coin, ~$20M market cap at the time).

2.This trader deliberately self-liquidated by pumping JellyJelly’s price on-chain. Essentially forcing…

Arthur Hayes, a prominent figure in the cryptocurrency space, shared his thoughts on the situation, saying, "Let's stop pretending that Hyperliquid is decentralized… I bet HYPE will soon return to its initial state because the decline will continue to decline."

$HYPE can’t handle the $JELLY

Let’s stop pretending hyperliquid is decentralised

And then stop pretending traders actually care

I bet you $HYPE will return to where it started in short order because degens will continue to degen