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- Hyperliquid’s USDC reserves dropped from $2.58B to $2.02B after the JELLY controversy.
- HYPE token fell 10% in 24 hours, with trading volume surging 443%.
- Bitget CEO called Hyperliquid’s actions “unethical and unprofessional,” likening it to FTX.
Hyperliquid is grappling with over $340 million in USDC outflows following the fallout from the JELLY token controversy. The platform, which delisted JELLY after a suspected market manipulation event, now faces scrutiny over its handling of the crisis.
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
Meanwhile, Hyperliquid’s native token, HYPE, has dropped 10% in 24 hours, and market volatility has intensified.
JELLY Manipulation Sparks Mass Liquidations
Hyperliquid just took a massive hit after a whale pulled off a risky ETH trade that left its liquidity providers deep in losses. The trader opened a huge 175,179 ETH ($335.6M) long position with 50x leverage, then cashed out 14,945 ETH ($28.7M), making $1.86M in profit while Hyperliquidity Providers (HLP) lost $4M in a single day.
A whale opened a long position of 175,179 $ETH($335.6M) with 50x leverage today.
He actively closed 14,945 $ETH($28.7M), leaving 160,234 $ETH($306.85M) to be liquidated, making a profit of $1.86M, causing Hyperliquidity Provider(HLP) to lose $4M in the past 24 hours!… pic.twitter.com/hbCsE2jctU
— Lookonchain (@lookonchain) March 12, 2025
The panic didn’t stop there. 28 whale wallets quickly pulled out $65M USDC, showing a clear loss of confidence in the platform. According to a post on X by blockchain analytics firm Lookonchain, another whale holding 124.6M JELLY ($4.85M) played the system—first dumping the token and forcing HLP into a 398M JELLY ($15.3M) short position, then buying it back to pump the price, leaving HLP with a massive $12M loss.
With money pouring out and traders questioning Hyperliquid’s risk controls, the platform is in a tough spot.
To avoid further damage, Hyperliquid’s validator committee forced-settled JELLY at $0.0095 and delisted it entirely. The platform assured users that short positions were settled at their initial entry price and that affected users would be compensated by the Hyper Foundation.
USDC Outflows, Market Backlash, and Bitget’s Criticism
Hyperliquid’s handling of the JELLY crisis has led to massive capital loss, with USDC reserves plunging from $2.58 billion to $2.02 billion in the past month. The outflows mirror a previous $300 million withdrawal event triggered by a Bitcoin whale liquidation.
The controversy has drawn sharp criticism from Bitget CEO Gracy Chen, who likened Hyperliquid to FTX, calling its actions “immature, unethical, and unprofessional.” She further argued that Hyperliquid operates more like an unregulated offshore exchange than a decentralized platform.
Notably, Arthur Hayes, a prominent figure in crypto, weighed in on X (Formerly Twitter), saying:
“Let’s stop pretending that Hyperliquid is decentralized… I bet HYPE will soon return to square one because the decline will continue.”
Following the JELLY incident, Hyperliquid’s native token HYPE has tumbled 10% in 24 hours, with trading volume soaring 443% to reach $466 million. Despite the recent decline, HYPE is still 284% up from its lowest point, though it remains 58% below its all-time high of $34.96.
Meanwhile, the total value locked (TVL) in Hyperliquid’s Provider Vault, which plays a key role in market-making and liquidations, has plummeted from $540 million to $195 million since February, according to DefiLlama data.
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