#JELLYJELLYFuturesAlert

The latest upheaval around Hyperliquid results from an event involving the JELLY token, a somewhat new cryptocurrency introduced as part of a Web3 social media project. Combining short bets on Hyperliquid with on-chain spot buys, a trader allegedly performed a complex move that resulted in a $13.5 million unrealized loss for Hyperliquid’s automated market maker vault (HLP). Hyperliquid’s validator responded by setting convened and voting to delist the JELLY perpetual futures, therefore forcibly closing all positions and settling the market at a price much below the going decentralized exchange rates.

The crypto community has spoken strongly against Hyperliquid’s unilateral delist of JELLY and force-settle positions. Critics—including well-known personalities like Bitget CEO Gracy Chen and BitMEX co-founder Arthur Hayes—have questioned the platform’s distributed character.

Chen went as far as implying that Hyperliquid might be on a road to become “FTX 2.0,” citing the “immature, unethical, and unprofessional” handling of the matter and the hazardous precedent set by the forced residence. Similar ideas were expressed by Hayes, who said the episode revealed Hyperliquid’s centralized approach of governance.

Hyperliquid justified its actions by claiming that delisting was a required step to stop a possible $240 million liquidation endangering its whole liquidity pool. Considered in charge of network governance, the platform’s sixteen validators all voted for delisting.

Although Hyperliquid’s Hyper Foundation promises to reimburse most impacted users—except from those flagged for suspicious activity—the incident has sparked a discussion on the degree of centralization in DeFi systems such as Hyperliquid, where a small group of validators can make such significant decisions.