Hyperliquid [HYPE] delisted JELLYJELLY (JELLY) Futures after a massive short position triggered a market-wide shakeout.

A trader opened a $6 million short with 20x leverage, then bought JELLY spot to force liquidations. The prices surged 400–500%, pushing the liquidator vault into an unrealized loss.

On March 26, Hyperliquid [HYPE] delisted JELLYJELLY (JELLY) Futures after a massive short position triggered a market-wide shakeout, leaving the liquidator vault with a $12 million unrealized loss and a potential for total liquidation if JELLY’s price continued to rise.

However, the validator committee intervened quickly, performing a forced settlement of JELLY at $0.0095, which resulted in a net gain of $703,000 for the vault from the $10.63 million loss that was initially reported.

This move saved the liquidator vault from potential bankruptcy, which would have occurred if the token's price reached a level that integrated a $150 million market cap for JELLY.

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As the vault bled, another wallet, 0x20e8, entered a long position worth $8.2 million as the liquidations unfolded and exited within minutes, securing $8 million in profit.

This pattern isn't new, as a similar exploit occurred with BERA in February.

According to Arkham, wallet 0xde95 sold JELLY spot to exert upward pressure, incrementally driving the vault deeper into risk.

Since March 22, five wallets linked to the attacker have acquired 10% of the token's supply, which in some way hints at on-chain patterns that suggest deliberate coordination.

At the beginning of the year, JELLY's market cap hovered between $10 and $20 million, rendering it susceptible to manipulation with even modest capital.

To put it in perspective, shifts of $4-8 million in the token's spot price altered the market cap by over 400%.

Data from Birdeye shows that trading volume on the platform surged by 1,852%, reaching $170 million for the day, while transaction count jumped by 997%, with 272,000 trades recorded.

Active trader count also saw a significant increase of 961%, and liquidity remained stable at $2.99 million.

However, sell volume outweighed buy volume by a slight margin, with $85 million in sells compared to $84 million in buys, which suggests manipulation rather than organic demand.

On-chain links revealed that five wallets connected to the original whale now hold 10% of JELLY's total supply, which equates to approximately $1.9 billion in tokens acquired between March 22 and the day of the incident.

Beyond the direct wallet connections, the activity on the JELLY token page showcases a massive explosion in transaction counts and volume, which is an indicator of the market activity that went into the price movements.

This level of market activity cannot occur by chance, especially not within a single day.

This incident has brought to light the speed at which Hyperliquid's validator committee can respond to pressing issues, which in turn raises further questions about the governance model of the exchange.

Critiquing Hyperliquid's decision-making process, Gracy Chen, CEO of cryptocurrency exchange Bitget, expressed her views on X.

Despite presenting itself as an innovative decentralized exchange with a bold vision, Hyperliquid operates more like an offshore centralized exchange.

— Gracy Chen (@GracyChen__)

Drawing comparisons to past collapses, Chen warned that Hyperliquid may be on track to become FTX 2.0.

Her comments followed a post by an X user, who highlighted the rapid changes in the HYPE token price, which dropped by 22% as validators voted on the proposal to delist JELLY.

Chen further criticized the decision to force-settle JELLY as immature, unethical, and unprofessional, highlighting the long-term consequences of undermining market trust.

The decision to close the $JELLY market and force-settle positions at a favorable price sets a dangerous precedent. Trust—not capital—is the foundation of any exchange … and once lost, it’s almost impossible to recover. A truly decentralized exchange would prioritize community consensus.

— Gracy Chen (@GracyChen__)

Clearly, the validator vote mirrored actions taken by centralized exchanges when faced with extreme market pressure or a large-scale liquidation that threatens the stability of the exchange.

Arthur Hayes, on the other hand, focused on the contradiction between the protocol's branding and its actions.

"DeFi dreamers will say it’s the best thing since sliced bread. I’m not so sure. Hyperliquid is a so-called ‘decentralized exchange’ or DEX, and it's designed to be