Bitget CEO Accuses Hyperliquid of Reckless Handling of JELLY Token Incident

Gracy Chen, CEO of the prominent cryptocurrency exchange Bitget, has leveled sharp criticism against Hyperliquid, a blockchain network, for its handling of a suspicious incident involving the JELLY token on March 26th. Chen’s statement suggests that Hyperliquid’s actions jeopardized the network’s stability, drawing parallels to the infamous FTX collapse.

Hyperliquid, known for its perpetual exchange platform, delisted perpetual futures contracts for the JELLY token following claims of \”suspicious market activity.\” This move, decided by Hyperliquid’s relatively small validator network, has raised fresh concerns about the platform’s perceived centralization.

Chen voiced her concerns, stating, \”Despite its claims of being a decentralized exchange, Hyperliquid operates more like a centralized exchange, risking a repeat of the FTX debacle.\” While not directly accusing Hyperliquid of legal wrongdoing, Chen strongly condemned their response as immature, unethical, and unprofessional.

She highlighted the dangerous precedent set by closing the JELLY market and forcibly settling positions at a favorable price. \”Trust, not capital, is the foundation of any exchange,\” Chen emphasized, adding that \”once lost, it’s almost impossible to recover.\”

Related: Hyperliquid delists JELLY perps, citing ‘suspicious’ activity

The JELLY Token Incident: A Closer Look

The JELLY token, launched in January by Venmo co-founder Iqram Magdon-Ismail, saw its market capitalization briefly reach $250 million before plummeting to the single-digit millions. However, on March 26th, following Binance’s launch of its own JELLY perpetual futures, the market cap briefly spiked to around $25 million. This surge coincided with a Hyperliquid trader opening a substantial short position, which was then self-liquidated through on-chain price manipulation, according to reports.

While BitMEX founder Arthur Hayes downplayed the incident’s long-term impact, claiming the network’s decentralization claims were overstated, Chen’s criticism highlights the broader concerns surrounding Hyperliquid’s operational practices and the risks associated with centralized control in a decentralized ecosystem. The incident underscores the critical need for transparency and robust risk management strategies within the cryptocurrency market.

This incident follows a previous incident in March where a whale liquidated a large ETH position, resulting in significant losses for Hyperliquid liquidity pool depositors, further emphasizing the need for improved risk management measures.

Hyperliquid’s relatively small validator network, compared to larger chains like Solana and Ethereum, raises concerns about its susceptibility to manipulation by a small group of insiders. This, combined with recent events, highlights the critical need for greater transparency and decentralization within the Hyperliquid ecosystem.