The HYPE crypto by Hyperliquid, a decentralized perpetual futures platform, has faced turbulence due to a whale manipulation scandal involving JELLYJELLY. Yesterday, Hyperliquid delisted JELLYJELLY after a trader exploited its price, causing a $12 million unrealized loss to the Hyperliquid vault. Binance and OKX then listed JELLYJELLY crypto futures shortly, fishing in a rough water.
How did this happen? The manipulator saw a trader short
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, dump it on DEXs, and then long it, squeezing Hyperliquid’s vault.
This incident has also raised questions about whether HYPE crypto can recover from its recent 22% drop.
The Manipulation and The Market Response to Hype Crypto
The manipulation began with wallet “0xde96” opening a $6 million short position on JELLYJELLY. Simultaneously, a whale crashed the price on decentralized exchanges, forcing the HLP vault to absorb the short. A new wallet, “0x20e8,” then longed the token, driving its price up and pushing the vault’s losses to $12 million initially.
Address 0xde9…c91 withdrew margin, offloading 398M $JELLY shorts onto Hyperliquid. As $JELLY surged to $0.04, its HLP vault suffered a $10M unrealized loss.
— XBIT (@XBITDEX) March 27, 2025
Hyperliquid acted fast, halting trading and delisting the contract. The validators cited “suspicious market activity” and settled 392 million JELLYJELLY at $0.0095, netting a $703,000 profit for the vault.
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price took a hit, dropping as much as 22% before recovering slightly to trade 10% lower.
This fast response has, in the end, boosted some confidence but exposed vulnerabilities in the Hyperliquid system.
JELLYJELLY, a Solana-based memecoin, had a market cap of $25 million during the fiasco. Its price pumped by close to 500% amid the squeeze, peaking at $50 million before Hyperliquid’s intervention.
In the end, Hyperliquid froze trading and delisted JELLYJELLY, promising to reimburse most users via the Hyper Foundation.
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The Good, The Bad, The Ugly: Will Hype Recover?
On the other hand, Binance and OKX decided to list JELLYJELLY futures during the chaos, which then brought speculation of competitive sabotage.
Furthermore, the culprit of this whale manipulation has freshly funded wallets funded via Binance.
it would even funnier if this outcome happened bc both JELLY manipulators 0x20e8 & 0x67f were freshly funded via Binance on Arbitrum
0xf5c07ec0acfc371c05a5de9882c8c90bfa1c071fa9356e6710e3db17d5abdd48
0xf171d527b9a277b895a02ca4b7c5ee081cb94a8932a60eeadbdcb02ea729b524…
— ZachXBT (@zachxbt) March 26, 2025
Listings by Binance and OKX coincided with Hyperliquid’s crypto struggles to capitalize on the chaos. If JELLYJELLY’s market cap had hit $150 million, the HLP vault risked full liquidation, a scenario Hyperliquid narrowly avoided.
As for now, Hyperliquid has pledged technical upgrades to prevent future crypto exploits. Raising margin requirements to 20% for certain positions is one step taken after the earlier ether incident.
The sentiment around HYPE crypto’s recovery is mixed right now. Some praise Hyperliquid’s quick action and reimbursement plan, seeing it as resilience. Others question its decentralized ideology, noting the manual override of JELLYJELLY price and validator vote to delist, showing centralized control.
Meanwhile, data shows Hyperliquid’s total value locked dropped from $283 million to $190 million post-incident. HYPE crypto’s path to recovery hinges on rebuilding user confidence and proving it can withstand whale manipulation.
With Binance and OKX in the mix, competition is getting fierce, but Hyperliquid’s response will pave the way forward.
Whatever is down will go up.
FUD is annoying, but makes you stronger.
Do the right thing, then let your users choose. You know. 
— CZ 
BNB (@cz_binance) October 17, 2022
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Key Takeaways
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