A trader accused of manipulating the Hyperliquid platform may face losses of nearly $1M after attempting to crash the Jelly my Jelly futures market.
Manipulation Attempt on Hyperliquid
According to Arkham Intelligence, the trader created three accounts on Hyperliquid within five minutes. The goal was to manipulate the platform's liquidation system by opening two long positions totaling $4.05 million and one short position worth $4.1 million to create artificial leverage.
Strategy and Consequences
When the price of JELLY surged over 400%, the trader’s $4 million short position was liquidated. The liquidation process transferred the position to the Hyperliquidity Provider Vault (HLP) due to its size. The trader withdrew collateral from two other accounts, having a significant positive balance but later faced restrictions on operations and started selling off assets.
Hyperliquid’s Reaction and Expert Commentary
Hyperliquid decided to delist JELLY futures and tightened margin requirements following the manipulation case. This happened amid previous liquidity crises on the platform, including the liquidation of a $200 million ETH position. Bybit CEO Ben Zhou shared his views on the challenges of managing high-risk trades on DEX and CEX platforms.
Incidents on the Hyperliquid platform highlight the need for improved liquidity mechanisms and risk management on cryptocurrency exchanges.
