Hyperliquid on Track to Become FTX 2.0: Bitget CEO After JELLY Incident

Following the JELLY token incident, Hyperliquid is now criticized by several analysts and industry leaders with the Bitget CEO Gracy Chen vociferously stating that the DEX is on track to become FTX 2.0. 

In her recent X post, Chen slammed that the way Hyperliquid handled the JELLY incident was “immature, unethical, and unprofessional” which triggered losses on innocent users and raised serious doubts over its integrity.

The controversy began when a trader opened a $6 million short position on Hyperliquid on JellyJelly (JELLY), a low-cap token with a market cap of around $20 million at the time. In a shocking move, the trader then manipulated the market by pumping JELLY’s price on-chain, deliberately liquidating his own short position and leaving Hyperliquid to absorb a loss of over $12 million . 

The forced squeeze caused JELLY’s market cap to surge from $10 million to over $50 million in under an hour, and some analysts warned that if it reaches $150 million, Hyperliquid could have faced a full liquidation. In response to the escalating crisis, the exchange abruptly delisted JELLY, further fueling concerns about its transparency and risk management. 

While Hyperliquid defends its decision, stating that the delisting was necessary due to extreme market manipulation, the incident has left traders questioning whether the platform can truly operate fairly.

“Despite presenting itself as an innovative decentralized exchange with a bold vision, Hyperliquid operates more like an offshore CEX with no KYC/AML, enabling illicit flows and bad actors,” said Chen. 

Chen also emphasized that Hyperliquid’s product design is alarming as its “mixed vaults expose users to systemic risk” and “unrestricted position sizes open the door to manipulation.” 

“Unless these issues are addressed, more altcoins may be weaponized against Hyperliquid, putting it at risk of becoming the next catastrophic failure in crypto,” she said.