HyperLiquid Delists JELLY After $13M Vault Squeeze Triggers Chaos
HyperLiquid has officially delisted JELLY and forcibly closed all positions after a trader manipulated its low liquidity, causing the platform’s market-making vault (HLP) to suffer a staggering $13.5 million loss.
How the Manipulation Unfolded
On-chain data from Lookonchain reveals that the trader initially shorted $4.85 million worth of JELLY on HyperLiquid. Simultaneously, they bought large amounts of JELLY on decentralized exchanges (DEXs), artificially driving up the price and triggering a liquidation of their short position.
This forced HyperLiquid’s HLP vault to absorb the short, locking it into a massive unrealized loss. Since JELLY’s liquidity on DEXs was low, the price was easily manipulated, allowing the trader to influence the perpetual contract price feed.
HyperLiquid Responds: Forced Settlement at a Fraction of Market Price
To prevent further damage, HyperLiquid forcefully settled JELLY at $0.0095, far below its $0.50 oracle price from decentralized sources. The platform justified the move in a statement on X:
“Due to suspicious market activity, the validator set has voted to delist JELLY perps. Impacted users—except flagged addresses—will be reimbursed by the Hyper Foundation in the coming days.”
Backlash Over Exchange Intervention
The crypto community reacted swiftly, with some defending HyperLiquid’s decision while others, including Newfound Research CEO Corey Hoffstein, raised concerns over whether the forced settlement was fair or an overreach of centralized power in a supposedly decentralized space.
Binance Capitalizes, JELLY Skyrockets 560%
In a surprising twist, Binance announced JELLY futures listing shortly after HyperLiquid’s delisting. The news sent JELLY soaring by 560%, fueling speculation that the token’s volatility is far from over.
DeFi Manipulation Strikes Again: A Parallel to Mango Markets
The event mirrors the 2022 Mango Markets exploit, where Avraham Eisenberg manipulated oracles to secure millions in profits. Although the JELLY attacker didn’t walk away with a massive payday, the case raises pressing concerns about the risks of low-liquidity tokens and how exchanges should respond to market manipulation without undermining trust.
