A trader who attempted to manipulate the Hyperliquid exchange using the Jelly my Jelly (JELLY) memecoin is now facing nearly $1 million in losses.
According to blockchain analytics firm Arkham Intelligence, the trader created three accounts within minutes, placing massive long and short positions to exploit the platform’s liquidation system.
They then pulled out their collateral to make profits before Hyperliquid could do so. However, when the price of JELLY rose by over 400%, the trader’s $4 million short position was closed out.
The short was too big to be executed and was transferred to the Hyperliquidity Provider Vault (HLP). At the same time, the trader also withdrew money from the other two accounts that he or she had with them.
Hyperliquid responded by restricting their accounts to reduce-only orders, forcing them to sell assets to recover funds. The exchange later froze and delisted JELLY, closing its market at the same price as the trader’s short trade. As a result, the first two accounts lost all floating profits and losses.
Arkham reported that the trader managed to withdraw $6.26 million, but at least $1 million remains stuck. If they can withdraw it later, their total loss will be only $4,000. Otherwise, they stand to lose nearly $1 million.
This isn’t the first such incident on Hyperliquid. Earlier this month, a whale intentionally liquidated a $200 million Ether position, causing HLP to lose $4 million. Traders are now targeting leveraged positions, creating a new wave of high-risk market activity.
Also Read: Hyperliquid Loses $12M as Whales Manipulate $JELLYJELLY Price
