The DeFi platform Hyperliquid removed $JELLY (jellyjelly) tokens due to whale exploitation which resulted in a $12 million loss during the price manipulation event.
On X, the LookOnChain reported the incident that highlighted how unstable DeFi markets are particularly for leveraged perpetual futures.
A massive whale with 124.6M $JELLY ($4.85M) is manipulating the price of $JELLY (jellyjelly) to make Hyperliquidity Provider (HLP) face a loss of $12M!
He first dumped $JELLY, crashing the price and leaving HLP with a passive short position of 398M $JELLY ($15.3M).
Then he bought…— Lookonchain (@lookonchain) March 26, 2025
Whale Manipulation Triggers Massive HLP Loss
The whale managed to execute price manipulation on 124.6 million $JELLY tokens while the currency retained its $4.85 million value. At first, the whale sold a major share of $JELLY tokens which dropped prices severely thus triggering a loss worth $15.3 million from HLP’s 398 million passive short position in this token.
When the whale acquired the tokens the market price increased which made HLP bear an $12 million loss through their squeezed short position.
Hyperliquid’s $JELLY Liquidation and Delisting
In the morning, Hyperliquid sold 392 million $JELLY tokens at $0.0095 and earned $703,000 profit without incurring any losses per on-chain information. Hyperliquid made the decision to stop trading $JELLY on their platform soon after the exploitative moves of a whale trader caused market uncertainty.
DeFi’s Ongoing Volatility Challenge
Hyperliquid serves as a Layer-1 blockchain for DeFi with strong scalability. This incident demonstrates that DeFi platforms need enhanced security against whale manipulations like in other parts of the crypto market.