HyperLiquid Delists JELLY After $13 Million Liquidation Loss
whichHyperliquidity Provider (HLP), part of the HyperLiquid derivatives exchange, experienced a significant loss due to alleged price manipulation of the JELLY token.
- HLP's unrealized PNL reached negative $13.5 million.
- HyperLiquid's native token (HYPE) dropped by 20% following this incident.
- A trader holding $4.85 million of the JELLY token combined short trades on HyperLiquid with on-chain spot buys, leading to liquidation and HLP inheriting a short position.
- The trader then purchased JELLY aggressively on spot exchanges, causing the price to rise and HLP's losses to increase.
- To mitigate losses, HyperLiquid closed the JELLY market at $0.0095 instead of $0.50 as recorded by oracles.
- HyperLiquid announced it would delist JELLY perps after suspicious activity was detected, ensuring all users except flagged addresses will be compensated automatically.
- Concerns about the legality of HyperLiquid's actions were raised by Newfound Research CEO Corey Hoffstein.
- Following the delisting, Binance announced futures for JELLY, resulting in a 560% surge in spot prices.
This situation parallels the 2022 exploit on Mango Markets, where similar manipulative strategies led to substantial gains for traders.