Hyperliquid (HYPE)-JELLY drama could have sparked a CEX vs. DEX war in crypto
Hyperliquid (HYPE)-JELLY drama could have sparked a CEX vs. DEX war in crypto 
Cryptocurrency Mar 27, 2025 Share
Hyperliquid, a (supposedly) decentralized trading platform, delisted its JELLYJELLY perpetual futures after a trader’s manipulation caused $13 million in losses. The incident, developed on March 26, sparked debates about decentralization and market integrity in crypto.
The drama unfolded when a trader exploited Hyperliquid’s system, forcing the platform to reimburse most users via the Hyper Foundation. This swift action followed suspicious activity that rattled the decentralized exchange’s native token, HYPE, and its Hyperliquidity Provider Vault (HLP).
Essentially, the trader opened a $6 million short position on JELLYJELLY, as detailed by several media outlets. They then pumped the Solana-based memecoin’s price on-chain, surging it over 400%, according to Arkham Intelligence. This triggered a liquidation, but the position’s size overwhelmed Hyperliquid’s system.
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The HLP absorbed the short, facing an unrealized loss of $13.5 million, reported CoinDesk, before validators intervened.
Hyperliquid’s validators voted to delist JELLYJELLY and forcibly closed all positions, as announced on X by the Hyperliquid oficial account.
After evidence of suspicious market activity, the validator set convened and voted to delist JELLY perps.
All users apart from flagged addresses will be made whole from the Hyper Foundation. This will be done automatically in the coming days based on onchain data. There is no…
— Hyperliquid (@HyperliquidX) March 26, 2025
The Hyper Foundation pledged to refund unaffected users automatically, excluding flagged addresses tied to the manipulation. Blockchain data will determine payouts, expected within days, the platform confirmed. Meanwhile, the trader remains nearly $1 million down, per Arkham Intelligence’s March 26 analysis.
Analysts and experts weigh in on Hyperliquid’s drama
Analysts see this as a test of Hyperliquid’s decentralized ethos. Bitget CEO Gracy Chen criticized the handling, warning of an “FTX 2.0” risk, as quoted by Cointelegraph. Posts on X, like Benjamin Celermajer’s, highlighted validators’ ability to “fudge” prices, raising centralization concerns.
#Hyperliquid may be on track to become #FTX 2.0.
The way it handled the $JELLY incident was immature, unethical, and unprofessional, triggering user losses and casting serious doubts over its integrity. Despite presenting itself as an innovative decentralized exchange with a…
— Gracy Chen @Bitget (@GracyBitget) March 26, 2025
On the other hand, Ran Neuner said that these events started a war between centralized and decentralized exchanges. Neuner criticized how institutions like OKX and Binance dealt with the issues, highlighting the differences on how they dealt with Bybit’s hack.
“Today’s reaction from @okx and @binance was appalling and a clear declaration of war between CEX and DEX. Unlike when @Bybit_Official was hacked and all the CEX’s chimed in to help, this time their mission was to destroy! I expected more from two leading companies in the crypto world where we should all be fighting for decentralization.”
HYPE price analysis
HYPE, Hyperliquid’s base token, is trading at $14.10 by press time, down 26.24% in a month. The downfall is marked by a sharp drop yesterday, following the drama that developed around the platform.
This echoes a prior $4 million HLP loss earlier in March, signaling recurring vulnerabilities.
Hyperliquid (HYPE) price chart.Source: Finbold
Critics, including Arhur Hayes, co-founder of BitMex, called Hyperliquid’s decentralization “fake,” predicting further HYPE price declines.
Hyperliquid’s response averted a deeper crisis, but the drama exposes flaws in high-leverage DeFi trading. Centralized exchanges like Binance and OKX listing JELLY futures, as @daynnightclub posted, may intensify pressure. While refunds soften the blow, trust in Hyperliquid’s model hangs in the balance—true decentralization remains an elusive goal in this volatile space.
Featured image from Shutterstock
