Hyperliquid delisted JELLYJELLY after a shadowy whale's audacious shorting spree

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Hyperliquid delisted JELLYJELLY after a shadowy whale’s audacious shorting spree sent shockwaves through the exchange, nearly sinking its HLP Vault with a $12 million loss in a matter of minutes.

After evidence of suspicious market activity, the validator set convened and voted to delist JELLY perps.

All users apart from flagged addresses will be made whole from the Hyper Foundation. This will be done automatically in the coming days based on onchain data. There is no need to contact support.

A snapshot of the Zoom session with Hyperliquid CEO Mark Musashi has been shared with members of the Hyperliquid community. In the video, Musashi apologized for the incident and explained the exchange’s perspective on the events that unfolded.

According to Pawa, a trader opened an $8 million short position on JELLYJELLY, a low-liquidity coin with a $20 million market cap at the time.

The trader allegedly bought JELLY tokens, pumping the token’s price on-chain, driving it higher and forcing their own position into liquidation.

The liquidator vault absorbed the remaining short position, which was around $12 million unrealized loss as JELLYJELLY’s price continued to climb. The token’s market cap peaked at around $50 million before delisting.

Taking advantage of the manipulated short squeeze and Hyperliquid’s forced liquidations, a newly created wallet starting with “0x20e8” opened a long position on JELLYJELLY. As the price skyrocketed, the trader swiftly pocketed over $8 million in profits.

At the time, if JELLYJELLY’s price continued to rise and reached a $150 million market cap, Hyperliquid’s liquidator vault faced the risk of full liquidation. Those fears escalated as Binance and OKX announced they would list the token on their futures markets.

Announcing the token’s delisting, Hyperliquid said that despite efforts to mitigate the situation, the exchange was unable to reach a solution with the relevant parties involved in the market manipulation.