HyperLiquid has been at the center of a scandal due to a market manipulation incident, highlighting issues with its security protocols and risk management.
Market Manipulation Scheme Exposed
Blockchain analytics firm Arkham Intelligence detailed the manipulation scheme involving the $JELLY token. An address 0xde95 opened a substantial short position on HyperLiquidX, then executed a series of trades exploiting system vulnerabilities. This included opening two long positions worth $2.15 million and $1.9 million, and one short worth $4.1 million to artificially manipulate the market.
A Pattern of Problems for HyperLiquid
Incidents involving market manipulation on HyperLiquid are not isolated. In March, the platform faced major losses due to a $4 million liquidation event related to Ethereum. The intense selling and repurchasing of tokens in such cases raise questions about the platform’s security measures.
The Centralization Debate
The $JELLY incident sparked debates about HyperLiquid’s decentralization. Arthur Hayes suggested the platform isn’t truly decentralized. Gracy, CEO of Bitget, criticized the platform’s handling of the issue, noting its lack of professionalism and maturity.
The $JELLY manipulation has endangered HyperLiquid’s reputation and raised questions about its ability to protect against market manipulations and safeguard user assets.
