Arthur Hayes calls Hyperliquid’s demise after Jelly liquidation drama

Arthur Hayes, Co-founder of BitMex, has weighed in on the future of Hyperliquid following its most recent decision to delist JELLY from its platform. The move came after the perpetual futures DEX reportedly uncovered suspicious market activity, leading to significant financial losses.

The series of events that led to Hayes’ comment started with Hyperliquid, a perpetuals decentralized exchange, delisting the JELLY (jellyjelly) token after a series of suspicious trading activities led to Hyperliquid losing over $10 million, with a threatening risk of liquidation. 

$HYPE can’t handle the $JELLY

Let’s stop pretending hyperliquid is decentralised

And then stop pretending traders actually give a fuck

Bet you $HYPE is back where is started in short order cause degens gonna degen

— Arthur Hayes (@CryptoHayes) March 26, 2025

Hyperliquid’s move to avoid liquidation

According to on-chain transactions cited by Lookonchain on X (formerly Twitter), a whale address, 0xde95, with 124.6M JELLY($4.85M) manipulated the market by dumping its JELLY tokens, leading to the liquidation of $4.5 million. This led to Hyperliquid taking on a $5 million short position on JELLY. 

A massive whale with 124.6M $JELLY($4.85M) is manipulating the price of $JELLY(jellyjelly) to make Hyperliquidity Provider (HLP) face a loss of $12M!

He first dumped $JELLY, crashing the price and leaving HLP with a passive short position of 398M $JELLY($15.3M).

Then he bought… pic.twitter.com/kYcKshV4rl

— Lookonchain (@lookonchain) March 26, 2025

While all this was happening, a new wallet address, 0x20e8, opened a long position on JELLY. The whale bought back JELLY tokens, thereby driving the prices up and causing serious losses for Hyperliquid. This market squeeze caused JELLY to surge by 230%, raising concerns that if its market cap reached $150 million, Hyperliquid could face full liquidation.

Given the imminent threat of liquidation and unusual market activity, Hyperliquid closed all perps, benching and liquidating the JELLY token at $0.0095 per token. Hyperliquid’s validators then voted to delist JELLY from the platform. The DEX reportedly made a profit of approximately 700,000 USDC from the exercise.

In an announcement on X, Hyperliquid mentioned that users who invested in the token will be compensated. 

“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 need to open a ticket. Methodology will be shared in detail in a later announcement.”

The DEX’s $HYPE token took a hit, falling by 20%. Its token found small relief after it delisted JELLY from DEX. 

Two leading centralized crypto derivatives exchanges, OKX and Binance have announced that they would be listing JELLY on their perpetual futures (perps) market. 

Data also showed that most of the funds used to open the positions that attacked Hyperliquid were withdrawn from OKX and Binance. These actions have led to questions about the intention of the centralized exchanges, with some users on X claiming that they are out to see the end of Hyperliquid in a fashion similar to FTX. 

Criticisms of the delisting move 

Gracy Chen, CEO of Bitget, shared her opinion on the matter, criticizing the manner that Hyperliquid handled the issue. According to Chen, the handling is immature, unethical, and unprofessional. She said the platform’s actions led to user losses and have raised serious questions on its integrity. 

The CEO said that the action sets a dangerous precedent, adding that trust, the foundation of any exchange, whether centralized or decentralized, is impossible to recover when lost. 

Chen pointed out some product design flaws of the platform, saying that if they don’t get fixed soon, actions similar to the JELLY issue will continue to be weaponized against Hyperliquid, setting it on the path to becoming the next FTX. 

The CEO of Bitget isn’t alone in her thoughts, as this drama has led to different reactions from the the crypto ecosystem in general. 

Arthur Hayes echoed the sentiments of the imminent demise of Hyperliquid in a post on X, where he claimed, “$HYPE can’t handle the $JELLY.” He also called for people to stop pretending that Hyperliquid is decentralized, adding that traders don’t care if a platform is centralized or decentralized. 

The co-founder of BitMex, a centralized exchange, added, “Bet you $HYPE is back where it started in short order cause degens gonna degen.” 

Responding to Hayes, another X user, @KyleReidhead, and co-owner of Milk Road, said, Degens don’t care about decentralization, they care about trading 24/7 w/o KYC, a service which Hyperliquid renders. Mainstream traders don’t care about decentralization, they care about ease of use. He added that he doesn’t think it means that decentralization doesn’t matter, but to most people, it doesn’t matter if a platform is decentralized or not. 

A large portion of users and crypto traders have been vocal in condemning Hyperliquid’s move to delist JELLY, calling for it to have allowed the market to decide the fate of the platform given its decentralized nature. Others are calling the action a double standard given the swiftness of the validator’s response, something reminiscent of how a centralized exchange will respond, thereby calling the platform a centralized platform pretending to be decentralized.

Hyperliquid, in its X post, said, “Technical improvements will be made, and the network will grow stronger as a result of lessons learned.” It added that it will be sharing more details shortly. 

The situation continues to unfold, with Hyperliquid’s response under scrutiny and broader concerns about the integrity of decentralized exchanges in the crypto ecosystem.

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