$13M Market Turmoil Leads HyperLiquid to Delist JELLY

HyperLiquid Delists JELLY After $13M Short Squeeze Manipulation Sparks Controversy

HyperLiquid has delisted JELLY and forcibly closed all open positions after a trader exploited low liquidity, leading to a $13.5 million loss for its market-making vault, HLP.

Inside the Manipulation: How HLP Got Trapped

According to on-chain analysis from Lookonchain, the trader opened a $4.85 million short position on HyperLiquid while simultaneously buying JELLY on decentralized exchanges (DEXs). This artificially pumped the token’s price, triggering liquidations that forced HLP to absorb the short position, pushing its unrealized losses to $13.5 million.

HyperLiquid’s HLP vault, which automates market-making and liquidation processes, was unable to keep up with the rapid price swings, leaving it exposed to significant losses.

HyperLiquid Steps In: Forced Settlement & Reimbursement

To contain the damage, HyperLiquid forcefully closed all JELLY positions and settled the token at $0.0095—far below the $0.50 price reported by oracles from DEXs.

In an official statement, HyperLiquid wrote:

“After detecting suspicious market activity, the validator set has voted to delist JELLY perpetual contracts. Affected users, except flagged addresses, will be reimbursed via the Hyper Foundation in the coming days.”

Crypto Community Reacts: A Precedent for Exchange Intervention?

The decision sparked heated debate, with critics—including Newfound Research CEO Corey Hoffstein—questioning whether HyperLiquid’s intervention was justified or if it sets a dangerous precedent for centralized manipulation of decentralized markets.

Binance Steps In, JELLY Surges 560%

As HyperLiquid shut down JELLY trading, Binance saw an opportunity and quickly listed JELLY futures, causing a massive 560% price surge—leaving many wondering if the token’s volatility is far from over.

A DeFi Flashback: Echoes of Mango Markets

The incident is reminiscent of the 2022 Mango Markets exploit, where Avraham Eisenberg manipulated oracles to drain millions from the protocol. Although the JELLY attacker didn’t secure a massive payday, the event highlights the vulnerabilities of low-liquidity tokens and the difficult balance between decentralization and market intervention in the crypto world.

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