🤯 What Happened at Hyperliquid: Trader JELLY May Have Lost $1 Million
Arkham Intelligence has revealed details of suspicious activity at Hyperliquid that led to the freezing and delisting of the Jelly my Jelly ($JELLY) memecoin.
Apparently, the trader tried to exploit the system with multi-million dollar positions — a strategy that may have resulted in nearly $1 million in losses.
➡️ How the Scheme Worked
The trader created three accounts in just five minutes:
🟡 Two with long positions: $2.15M and $1.9M
🟡 One with a short position: $4.1M to balance the longs
With this, he created artificial leverage, trying to profit from an aggressive pump of the token.
When $JELLY surged 400%, the short was liquidated — but due to the size of the position, it wasn’t immediate. It was directed to the Hyperliquidity Provider Vault (HLP).
At the same time, the trader withdrew part of the margin from the long positions, while the PnL (unrealized profit) was still in the seven digits.
➡️ How It Ended
Hyperliquid has limited accounts to “reduce-only” mode, forcing the trader to sell the tokens on the market from the first account.
The platform then closed the JELLY market at $0.0095 — exactly the price of the short.
This zeroed out all PnL on both long accounts, erasing any unrealized profits.
➡️ According to Arkham:
🟡 Total Withdrawn: $6.26M
🟡 Still on the platform: $1M
🟡 If he fails to withdraw this amount — the net loss will be almost $1 million
➡️ Hyperliquid Under Pressure Again
After the incident, $JELLY was completely removed from the platform.
🟡 On March 14, Hyperliquid had already increased margin requirements after HLP lost $4 million liquidating a long ETH position.
🟡 In this case, a whale sold a $200M long position in ETH, causing huge losses in the pool.
➡️ New Strategy: Whale Hunting
The so-called "democratized liquidation" is gaining momentum — where traders target overly leveraged positions, especially those of large players.
Arbitrage, manipulation, liquidation hunting — is this the new reality for HYPERLIQUID?
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