HyperLiquid delisted the JELLY token after detecting suspicious activity by a trader while making $1 million worth of funds inaccessible for the exploiter.
By Bhushan Akolkar
Updated
2 mins read
Just as HyperLiquid delisted the Jelly my Jelly (JELLY) meme coin after yesterday’s suspicious market activity, the trader behind the exploit is in a fix, eyeing a potential loss of $1 million.
Blockchain analytics platform Arkham Intelligence revealed that a trader attempted to exploit the system by manipulating the JELLY price movements and withdrawing the collateral even before HyperLiquid’s mechanism could respond.
Further investigation revealed that the trader opened three accounts within just a five-minute window. Two accounts held long positions worth $2.15 million and $1.9 million, while the third account carried a $4.1 million short position to offset the longs. While the trader tried to game the HyperLiquid protocol by withdrawing collateral from other two accounts, the decentralized exchange (DEX) made quick moves to freeze and delist the JELLY meme coin.
Thus, the data from Arkham shows that the exploiter still has unrealized profit and loss in some accounts, which were restricted to reduce-only orders. Thus, unless HyperLiquid allows the attacker to withdraw, it could lead to $1 million in losses.
While matching the trader’s short position, Hyperliquid closed the JELLY token market at a price of 0.0095, while nullifying all floating profit and loss on the first two exploiter accounts. According to Arkham, the trader managed to withdraw $6.26 million in total, though at least $1 million remains in the accounts.
Responding to the incident, HyperLiquid also delisted the perpetual futures for the JELLY token, citing clear signs of suspicious market activity.
The recent intervention by HyperLiquid protocol by freezing of accounts has led many to question the platform’s decentralization. ZachXBT slammed HyperLiquid, stating that it failed to act during the Radiant platform hack and protect DPRK funds, involving thousands of victims, citing decentralization. However, now, it’s behaving the complete opposite to this.
Blockchain investigator ZachXBT has criticized Hyperliquid for alleged inconsistencies in its decision-making, calling its governance structure overly centralized.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.