The DeFi platform Hyperliquid removed $JELLY (jellyjelly) tokens due to whale exploitation which resulted in a $12 million loss during the price manipulation event. On X, the LookOnChain reported the incident that highlighted how unstable DeFi markets are particularly for leveraged perpetual futures.
Whale Manipulation Triggers Massive HLP Loss
The whale managed to execute price manipulation on 124.6 million $JELLY tokens while the currency retained its $4.85 million value. At first, the whale sold a major share of $JELLY tokens which dropped prices severely thus triggering a loss worth $15.3 million from HLP’s 398 million passive short position in this token.
When the whale acquired the tokens the market price increased which made HLP bear an $12 million loss through their squeezed short position.
Hyperliquid’s $JELLY Liquidation and Delisting
In the morning, Hyperliquid sold 392 million $JELLY tokens at $0.0095 and earned $703,000 profit without incurring any losses per on-chain information. Hyperliquid made the decision to stop trading $JELLY on their platform soon after the exploitative moves of a whale trader caused market uncertainty.
DeFi’s Ongoing Volatility Challenge
Hyperliquid serves as a Layer-1 blockchain for DeFi with strong scalability. This incident demonstrates that DeFi platforms need enhanced security against whale manipulations like in other parts of the crypto market.
