HyperLiquid Delists JELLY After $13M Vault Manipulation Blowout

HyperLiquid, a decentralized exchange (DEX), has delisted the JELLY token following a high-stakes trading exploit that saw one of its market maker vaults suffer a temporary unrealized loss of $13.5 million.

The chaos began when a trader used a clever strategy to manipulate JELLY’s price across different venues. The attacker shorted JELLY on HyperLiquid while buying it on spot markets, causing the token’s price to surge and triggering liquidations. That left HyperLiquidity Provider (HLP)—HyperLiquid’s automated market maker bot—holding a massive underwater short position.

Related: Layer 1 Network Hyperliquid Notes All-Time Highs On 3 Metrics

Hyperliquid Engulfed in Controversy

With liquidity on decentralized spot exchanges thin, the attacker was able to artificially spike JELLY’s price to nearly $0.50, despite a much lower fair value. HLP’s position swung deep into the red, prompting HyperLiquid to forcibly close the JELLY market and settle at $0.0095, well below the manipulated oracle price.

The exchange later confirmed that its validator set voted to delist JELLY perpetuals due to “suspicious market activity.” HyperLiquid is committed to reimbursing all users except flagged accounts through its foundation, based on on-chain data. The reimbursement process is expected to be completed over the coming days, with public transparency promised.

The platform’s native token, HYPE, dropped 20% during the turmoil. Community backlash was swift, as many questioned the protocol’s risk controls and real-time monitoring systems for its automated vaults.

Mango Markets Echoes

The setup bore striking similarities to the 2022 Mango Markets exploit, where a trader manipulated token prices to borrow over $100 million from the platform. That case was widely labeled as market manipulation rather than hacking—a distinction that may apply to the HyperLiquid incident as well.

Some observers, including Newfound Research CEO Corey Hoffstein, raised questions about the legality of HyperLiquid’s intervention, especially regarding forced settlements and retroactive price setting.

Is that even legal?

— Corey Hoffstein (@choffstein) March 26, 2025

Binance stepped in hours later to list JELLY futures, capitalizing on the hype and chaos. The token’s spot price responded with a 560% surge.