JELLY Delisted by HyperLiquid Amid $13M Liquidation Battle

HyperLiquid Shuts Down JELLY Trading After $13M Vault Manipulation

Derivatives exchange HyperLiquid has officially delisted JELLY and liquidated all positions after a trader allegedly orchestrated a price squeeze, triggering a $13.5 million unrealized loss for its market-making vault, HLP.

How the JELLY Price Manipulation Happened

HLP, which serves as HyperLiquid’s automated market maker, took a major hit when an unidentified trader combined short positions with strategic on-chain purchases to manipulate JELLY’s price.

According to Lookonchain, the trader first shorted JELLY on HyperLiquid while simultaneously buying large amounts on decentralized exchanges, driving up the token’s price. This price jump liquidated the short position, leaving HLP to absorb the losses.

Because JELLY had low liquidity on decentralized exchanges, the trader was able to artificially inflate its price with relatively small capital, making HLP’s exposure even more severe. At the peak of the squeeze, HyperLiquid’s native token (HYPE) dropped 20%, reflecting broader market concerns.

HyperLiquid’s Reaction: Emergency Delisting & Settlement

To prevent further disruption, HyperLiquid force-closed all JELLY positions and settled the token at $0.0095, despite decentralized exchange oracles reporting a price of $0.50.

“After discovering suspicious market activity, the validator set convened and voted to delist JELLY perpetual contracts,” HyperLiquid stated on X. “Apart from flagged addresses, all affected users will be reimbursed through the Hyper Foundation within the coming days based on on-chain data.”

The move sparked controversy, with many questioning the fairness of overriding market prices. Newfound Research CEO Corey Hoffstein raised concerns about the legal and ethical implications of HyperLiquid’s forced settlement.

Binance Enters the Picture

While HyperLiquid shut down JELLY trading, Binance capitalized on the chaos, announcing JELLY futures listings—which immediately caused a 560% price spike in the token’s spot value.

Another Crypto Market Manipulation Scandal?

This case bears a striking resemblance to the Mango Markets exploit of 2022, where trader Avraham Eisenberg manipulated oracle price feeds to extract millions in profit. While the JELLY manipulator did not walk away with massive gains, the event raises serious questions about the security of decentralized finance markets and the role of exchanges in crisis management.