Hyperliquid Narrowly Escapes Liquidation after Massive JELLY Crypto Manipulation
The DeFi project Hyperliquid (HYPE) barely avoided a catastrophic liquidation due to coordinated price manipulation of the memecoin JELLY on its platform. Wallets connected to major centralized exchange platforms like Binance and OKX reportedly heavily shorted JELLY, causing a temporary 80% price drop.
At its peak, this manipulation exposed Hyperliquid’s integrated market-making protocol (HLP) to over $12 million in potential losses on these short positions. Such a loss could have rendered the platform insolvent.
Fortunately, Hyperliquid acted swiftly by delisting the JELLY token and closing the at-risk positions. Despite a brief dip in its HYPE token to below $13, the platform survived this large-scale speculative attack.
Binance and OKX : Accomplices or Competitors ?
While chaos unfolded on Hyperliquid, the two giants Binance and OKX surprisingly announced on their respective platforms the listing of perpetual futures contracts for… the JELLY token! A rather suspicious coincidence fueling speculations of a coordinated attack aimed at toppling Hyperliquid, now an essential DEX.
ZachXBT, a blockchain sleuth, traced the origins of the manipulation to two wallets. These wallets received funds from Binance, OKX, as well as other platforms like MEXC and Bybit, just before launching their assault on JELLY.
“It’s interesting to note that while Binance publicly supports Bybit after the $1 billion hack, it actively sought to destroy Hyperliquid by listing Jelly.” stated Jason Choi, VC and co-founder of Tangent Capital.
Another coincidence? Or a real collusion among major players in the industry to try and eliminate a disruptive decentralized rival challenging their model? After this scandal, distrust towards large centralized platforms is certainly warranted.
This incident exemplifies how some entities are willing to engage in a ruthless war within the crypto space. The neutrality and transparency of DEXes like Hyperliquid are becoming crucial in the face of traditional monopolies. Monitoring the murky connections between major centralized platforms and the origins of potential manipulations seems more necessary than ever for the community.
