The drama involving Hyperliquid and $JELLY is currently big news in the crypto market. Let's break it down in simple terms:
### What Happened?
- A large trader (whale) opened a significant short position on Hyperliquid for $JELLY tokens (approximately $6 million), betting that its price would fall.
- However, after this, the price of $JELLY suddenly surged by 230% (in one hour!), causing a short squeeze—meaning those who shorted suffered significant losses.
- Hyperliquid's HLP vault (automated market maker) was on the opposite side of this trade, suffering an unrealized loss of $12 million. If the price had risen further, the loss could have reached $240 million.
- Meanwhile, centralized exchanges (CEXs) like Binance and OKX listed $JELLY on their platforms, escalating the drama.
- Hyperliquid immediately delisted $JELLY and force-settled all positions at $0.0095 (while the oracle price was $0.50) to prevent further losses. The Hyper Foundation promised a full refund to all users except those affected.
### Why the Controversy?
- **Accusation of Centralization**: Hyperliquid claims to be a decentralized exchange (DEX), but only 16 validators made this major decision. People are saying this behavior resembles that of a centralized exchange, not DeFi.
- **The FTX 2.0 Label**: Bitget's CEO Gracy Chen and former BitMEX CEO Arthur Hayes mocked it as 'FTX 2.0'. They stated that Hyperliquid's response was 'unprofessional, unethical, and immature', suggesting it could lead to a failure similar to FTX, which collapsed in 2022.
- **Question of Trust**: Some believe this will break user trust, especially after ZachXBT claimed that Hyperliquid ignored North Korean hackers' funds but acted quickly in the $JELLY case.
### Impact on the Market
- Hyperliquid's token $HYPE fell 10-20% in 24 hours and dropped below $15.
- After the surge in $JELLY's price, it is now stabilizing at a market cap of $25 million.
- $340 million USDC was withdrawn from Hyperliquid, indicating user fear.
### Summary of the News
This incident began on March 26, 2025, when a trader manipulated $JELLY. Hyperliquid managed damage control, but its methods sparked a debate in the DeFi community. Some consider it a necessary step, while others argue it is evidence of centralization and poor management. People are warning it could be 'FTX 2.0', suggesting that if Hyperliquid does not improve its system, there could be major trouble in the future.
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