A group of whales has been suspected of manipulating the price of $JELLYJELLY, a memecoin, and this caused severe losses to Hyperliquid Vault HLP.
The whales were said to back major cryptocurrency exchanges. They collaborated to raise and then aggressively lower the value of the token, impacting the market severely. The token price spiked by almost 385% then dropped shortly after.
Lookonchain found that a whale opened large short positions on Hyperliquid at the same time as buying Jelly tokens off the platform. This strategy led to Hyperliquid facing a loss of $4.5 million on its HLP Vault. At one point, the total losses for Hyperliquid exceeded $6 million.
Things took a turn when another whale opened a long position, further driving the price of JELLYJELLY up. The whales eventually repurchased the token, which caused Hyperliquid to suffer even bigger losses, bringing the total loss to over $12 million.
ZachXBT, a well-known on-chain investigator, discovered that the wallet addresses linked to this manipulation were connected to big exchanges like OKX, MEXC, Bybit, and Binance. This raised suspicions that these exchanges might have been involved in the price manipulation.
“They deposited USDC to multiple fresh deposit addresses but also reused 0xb8e linking more of their addresses on Arbitrum (OKX, Bybit, MEXC as well so not only Binance),” ZachXBT added
The price manipulation didn’t stop with JELLYJELLY. The value of Hyperliquid’s own token, HYPE, was affected as well. The price of HYPE dropped from $16 to around $13 as the market adjusted.
However, after Hyperliquid acted fast by delisting JELLYJELLY and closing the short position, However, after Hyperliquid acted fast by delisting JELLYJELLY and closing the short position, HYPE’s price is trading at $14.5.
Still, Hyperliquid is working hard to keep its platform stable. The company reimbursed most of the users affected by the incident and made sure to explain that those users would be automatically compensated.
Hyperliquid also reported that its HLP Vault still holds nearly $220 million in deposits and has seen a positive net income of $700,000 in the last 24 hours.
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