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Hyperliquid, a decentralized perpetual futures exchange, has announced the delisting of JELLY token perpetual futures contracts following the detection of suspicious market activity. The Hyper Foundation, the nonprofit organization supporting Hyperliquid’s ecosystem, has committed to reimbursing most affected users for any losses incurred during the incident.
Details of the Incident
The suspicious activity involved a trader who opened a substantial $6 million short position on the JELLY token and subsequently manipulated the market by artificially inflating the token’s price on-chain, leading to a deliberate self-liquidation. This maneuver posed significant risks to Hyperliquid’s liquidity pool (HLP), potentially resulting in a full liquidation if JELLY’s market capitalization had reached $150 million.
Background on JELLY Token
Launched in January 2025 by Venmo co-founder Iqram Magdon-Ismail as part of the JellyJelly Web3 social media project, the JELLY token experienced initial volatility. Its market capitalization surged to approximately $250 million before declining to single-digit millions. As of March 26, the token’s market cap stabilized around $25 million.
Hyperliquid’s Response and Platform Adjustments
In response to this and previous incidents, Hyperliquid has implemented measures to enhance platform stability. On March 14, the exchange increased margin requirements for traders after its liquidity pool suffered a $4 million loss during a massive Ether (ETH) liquidation. These adjustments aim to mitigate the systemic impact of large positions and maintain the integrity of the trading platform.
