Hyperliquid has faced significant outflows exceeding $340 million in USDC following a controversy surrounding the JELLY token, which surged 429% before being delisted.
Reasons Behind the JELLY Dispute
The controversy began when Hyperliquid's treasury took a $5 million short position in JELLY. As the token's price rose unexpectedly, unrealized losses grew to $10.63 million. Further price manipulation was discovered involving large addresses.
Criticism of Hyperliquid's Actions
To prevent further harm, the Hyperliquid validator committee decided to delist JELLY. Bitget CEO Gracy Chen criticized Hyperliquid’s actions as 'unprofessional,' comparing the platform to FTX.
Impact on HYPE and the Market
The HYPE token has dropped by 10% in the past 24 hours. Trading volume increased by 443%, indicating heightened market activity. The total value locked in the Hyperliquidity Provider Vault also decreased.
The JELLY dispute and subsequent large withdrawals present a challenge for Hyperliquid, raising significant concerns about its future in the crypto space.
