A massive whale has cunningly schemed to drain the Hyperliquidity Provider (HLP) of $12 million. The mastermind behind this heist had an enormous stash of 124.6 million JELLY tokens, valued at $4.85 million, which it used to make a calculated strike on the Jelly market.
How The Heist Unfolded
The whale’s plan unfolded in two steps. First, the whale dumped a massive quantity of JELLY tokens, which sent the price crashing down. This sudden and drastic price drop left HLP scrambling, especially since they had a passive short position of 398 million JELLY tokens valued at $15.3 million. With HLP momentarily stunned, the whale seized the opportunity to strike again.
The whale quickly bought back the JELLY tokens it had just sold, relentlessly pushing the price back up. This move caught HLP off guard, leaving the provider vulnerable to a devastating loss. Eventually, HLP faced the harsh reality of a nearly $12 million loss inflicted by the whale’s ruthless manipulation of the Jelly market.
Crypto Community Unhappy
Following the exploit, Hyperliquid tried to mitigate more losses by delisting JELLY perpetual futures and settling all positions at $0.0095, a price significantly lower than the peak during the squeeze. This allowed HLP to turn a profit of approximately $700,000.
The incident highlighted vulnerabilities in Hyperliquid’s risk management, especially for low-liquidity assets like JELLY. It likely prompted further scrutiny of their systems, with potential for stricter position size limits and enhanced monitoring for manipulative trading. At the same time, many in the crypto community, including Bitget’s CEO Gracy Chen, label Hyperliquid’s handling of the incident as “immature, unethical, and unprofessional.”
In other news, DeFi exchange GMX and MIM Spell contracts have experienced a devastating hack, resulting in a loss of approximately 6,260 ETH, valued at $13 million. The vulnerability appeared in Abracadabra/Spell’s cauldrons, which were built on GMX V2’s GM pools. The contributors are currently investigating the cause of the hack, but it is clear that the incident highlights a broader issue of composability risk in DeFi.
