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Hyperliquid Intervenes: Stops $10M Loss After Whale’s Suspicious JELLY Token Trading
In a swift and decisive move, Hyperliquid has taken drastic measures to prevent a recurrence of this episode. The platform has stopped perpetual futures contracts linked to the JELLY token after detecting suspicious market activity involving these instruments.
It is reported that a trader opened a massive short position of $6 million on the token and then manipulated its price upwards to self-liquidate, which could have triggered a total liquidation of the platform. The sudden and dramatic shift in market conditions was deemed too volatile for Hyperliquid’s risk management policies.
As a precautionary measure, the platform has chosen to close these operations immediately to safeguard its users’ assets and ensure business continuity. Despite this setback, it is reassuring that most affected users will be reimbursed by the Hyper Foundation, an entity closely tied to the platform.
The reimbursement process will be automatic and initiated in the coming days based on blockchain data, except for addresses flagged by the platform. This proactive step demonstrates Hyperliquid’s commitment to transparency and accountability in its operations.
Despite this incident, it is crucial to note that Hyperliquid’s liquidity pool, known as HLP, has demonstrated a positive performance in the last 24 hours, generating a net income of approximately $700,000. This development highlights the importance of robust liquidity pools in maintaining market stability during periods of heightened volatility.
In related news, the JELLY token has suffered a significant loss, dropping from an initial market capitalization of around $250 million to stabilize at roughly $25 million. This substantial decline could be attributed to the sudden withdrawal of interest due to the manipulation and volatility associated with these perpetual futures contracts.
To avoid similar incidents in the future, Hyperliquid has taken steps to increase margin requirements for traders since mid-March. These enhanced risk management measures aim to minimize the impact of large positions that may destabilize the market.
Source: https://crypto-economy.com/hyperliquid-intervenes-stops-10m-loss-after-whales-suspicious-jellyjelly-trading/
