Whale Manipulates JELLYJELLY Price, Forcing Hyperliquid to Withdraw Perpetual Contract
Decentralized protocol Hyperliquid was forced to withdraw the perpetual contract for memecoin JELLYJELLY after a whale’s manipulation operation nearly cost its community vault, HLP vault, $12 million. This sudden crisis has shed light on the systemic vulnerabilities of decentralized trading platforms in the face of aggressive strategies employed by certain actors.
Coordinated and Precise Attack
It all began with the wallet ‘0xde96’ taking a short position on JELLYJELLY, a memecoin built on Solana. Simultaneously, a whale dumped a large quantity of the token on DEX platforms, causing its price to plummet. This drop triggered the mechanism of the HLP vault, which automatically entered a short position and became trapped in a squeeze.
A second wallet, freshly created (‘0x20e8’), then entered the scene with a long position on the token, betting on a rebound post-manipulation. This strategic sequence caused the HLP vault’s losses to swell to $12 million, according to Lookonchain data.
Binance and OKX Lurking, Tension Mounts
As the Hyperliquid community tried to react, social media exploded. Some openly suggested that competing platforms should list JELLYJELLY futures contracts to attract liquidity and increase pressure on Hyperliquid. Barely an hour later, Binance and OKX opened the floodgates and listed JELLYJELLY perps.
Facing this imminent danger, Hyperliquid reacted promptly: the protocol suspended trading of the memecoin and announced the complete withdrawal of the contract, just minutes before JELLYJELLY trading was set to activate on Binance and OKX. This decision, supported by validators, was motivated by ‘evidence of suspicious market activity’.
Immediate Compensation and Technical Reevaluation
Hyperliquid quickly announced that all users, except for flagged addresses, would be fully compensated through the Hyper Foundation. The reimbursement, they emphasize, will be automatic and based on on-chain data.
The protocol promises technical improvements to strengthen its resilience:
The network will emerge stronger, with essential lessons to guide its evolution
Hyperliquid Shaken but Standing
The native token HYPE was severely shaken by the incident, dropping as much as 22% at the height of the panic before recovering to around -10% by the end of the day. This is a blow to the protocol’s image, as it experiences its second manipulation attack in less than two weeks.
Meme token JELLYJELLY continues to make headlines. Conceived by Venmo co-founder Iqram Magdon-Ismail and its historical investor Sam Lessin, it unknowingly becomes the battleground for a wild war between whales, degens, and platforms. ‘As a self-proclaimed chaotic neutral whose hero is Jack Sparrow, I completely endorse this crypto chaos, even if I only half understand it,’ joked Lessin on X.
Hyperliquid may be shaken but still standing, with an urgent need to strengthen its defense against the increasingly complex strategies employed by market manipulators.
