On March 27, 2025, the cryptocurrency world was rocked by controversy as Hyperliquid, a decentralized exchange (DEX), found itself at the center of a storm involving the JELLY token. What began as a seemingly routine market event has spiraled into a scandal drawing comparisons to the infamous FTX collapse of 2022, with critics labeling Hyperliquid’s actions as a potential harbinger of “FTX 2.0.”
The JELLY Token Fiasco Unfolds
The trouble started when JELLY, a Solana-based meme coin, experienced a staggering 429% price surge on Hyperliquid’s perpetual futures market within hours on March 26. This dramatic pump, driven by coordinated whale activity, pushed the token’s market cap from $10 million to over $50 million, putting immense pressure on Hyperliquid’s liquidity vault (HLP). Reports estimate the vault suffered losses of $10-$20 million as leveraged short positions were squeezed.
In response, Hyperliquid’s validators only eight in total voted to delist JELLY perpetual futures, citing “suspicious market activity.” The platform forcibly closed all positions and promised reimbursements for unaffected users. However, this swift action failed to quell the uproar, as $340 million in USDC outflows followed, slashing Hyperliquid’s total value locked (TVL) to $195 million and tanking its native HYPE token by 10-20%.
Accusations of Manipulation and Centralization
The fallout intensified when evidence surfaced suggesting that wallets linked to major centralized exchanges (CEXs), including Binance and OKX, may have orchestrated the short squeeze. Intriguingly, both exchanges listed JELLY futures shortly after the pump, fueling speculation of a deliberate attack on Hyperliquid. Posts on X even pointed to a Binance co-founder’s cryptic response “Ok, received/got it” to a user request to list JELLY as part of a takedown strategy, though this remains unconfirmed.
Bitget CEO Gracy Chen emerged as a vocal critic, slamming Hyperliquid’s handling of the incident as “immature, unethical, and unprofessional.” She accused the platform of operating like an offshore centralized exchange despite its decentralized branding, noting its lack of KYC/AML measures and reliance on a small validator pool far fewer than networks like Ethereum or Solana. “Hyperliquid may be on track to become FTX 2.0,” Chen warned, echoing sentiments trending across social media.
Why the FTX Comparisons?
The parallels to FTX stem from Hyperliquid’s centralized decision-making and the significant losses incurred by its liquidity providers, reminiscent of FTX’s mismanagement and collapse. Critics argue that mixing vault funds and failing to prevent manipulation exposed vulnerabilities in Hyperliquid’s system. The $12-$20 million hit to its vault, coupled with a perceived lack of transparency, has eroded trust, with some calling it a “rug pull” orchestrated by insiders or rival exchanges.
Community and Market Reactions
The crypto community is divided. Some defend Hyperliquid’s quick delisting as a necessary move to avert a full liquidation crisis had JELLY spiked to $150 million, the platform could have collapsed entirely. Others see it as proof of deeper flaws, with one X user noting, “This raises serious concerns over DEX integrity.” Meanwhile, JELLY has stabilized at a $25 million market cap, but the damage to Hyperliquid’s reputation lingers.
Analysts suggest this saga could trigger tighter scrutiny of DEXs and their governance models. For now, Hyperliquid faces an uphill battle to restore confidence as outflows continue and the “FTX 2.0” label sticks. Will it recover, or is this the beginning of a steeper fall? The market awaits answers.
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