Recently, the decentralized exchange Hyperliquid has been in the spotlight after being actively liquidated by a "Hyperliquid 50x leverage whale", causing damage to its treasury (HLP). Last night, someone used a similar method with the meme coin $JELLYJELLY to stage another active liquidation, temporarily causing Hyperliquid to suffer over millions of dollars in floating losses.
To avoid treasury losses and prevent capital outflow, Hyperliquid ultimately chose to delist the $JELLYJELLY trading pair and settle positions at 0.0095 dollars, which is lower than the current price, ultimately avoiding any losses and even making a small profit.
Although this forced intervention directly delisted the token and controlled the price, avoiding project losses and stopping the death spiral risk, the decentralized exchange Hyperliquid has fallen into a public opinion vortex due to this centralized operation.
Current community comments are divided into two camps. One side believes that the trader's active liquidation did not violate Hyperliquid's rules, and making money is justified, so Hyperliquid should accept the loss. The other side argues that Hyperliquid's original intention of using the treasury to take over whale positions was to avoid market volatility caused by large position operations. Their good intentions were maliciously exploited, and choosing to delist the token and force liquidation was a wise move.
Currently, the community still has disputes. BlockTempo will compile the perspectives of three top crypto personalities for readers' reference.
Binance Founder CZ
After the incident, CZ, founder of the world's largest crypto exchange Binance, cited his experience with on-chain contract trading on X platform, indirectly responding to this event:
I know I'm not very smart. I admit there are things I don't understand. I often think that smarter people must know something I don't to do what they do.
But occasionally, I find that basic principles still apply.
(Don't misunderstand, the following post is not related to HL. That was my attempt to use Astherus on BSC. They don't show liquidation prices and have ADL, so they wouldn't have today's problem.)
Arthur Hayes
As a legendary trader and co-founder of the leading crypto derivatives trading platform BitMEX, Arthur Hayes was more direct, stating that Hyperliquid is not decentralized:
$HYPE can't handle $JELLY
Let's stop pretending Hyperliquid is decentralized
And stop pretending traders really care
I bet $HYPE will quickly return to its starting point because gamblers will keep gambling
Gracy Chen
Gracy Chen, CEO of Bitget exchange, had an even more negative view of Hyperliquid, describing it as a potential FTX 2.0 (FTX was a US crypto exchange that declared bankruptcy in November 2022, causing a devastating impact on the crypto market):
Hyperliquid might be heading towards becoming FTX 2.0.
Its handling of the $JELLY incident appears immature, unethical, and unprofessional, causing user losses and seriously questioning its integrity. Despite claiming to be an innovative decentralized exchange with a bold vision, Hyperliquid operates more like an offshore centralized exchange (CEX) without KYC/AML, opening doors for illegal fund flows and bad actors.
The decision to close the $JELLY market and force settlement at a favorable price sets a dangerous precedent. Trust—not capital—is the foundation of any exchange (whether CEX or DEX), and once trust is lost, it's almost impossible to restore.
Moreover, the platform's product design exposes worrying flaws: mixed treasury exposes users to systemic risks, and unrestricted position sizes provide opportunities for manipulation. Unless these issues are resolved, more altcoins might be used to attack Hyperliquid, risking it becoming the next catastrophic failure in the crypto space.
As for Hyperliquid's native token price, which dropped from $16 to nearly $13 last night, the panic has somewhat subsided, reporting at $14.57 before this article's submission.
