A trader attempting to manipulate the Hyperliquid exchange by exploiting the volatility of the Jelly (JELLY) memecoin has incurred nearly $1 million in losses.
According to blockchain analytics firm Arkham Intelligence, the trader set up three separate accounts within minutes, amassing substantial long and short positions in an effort to manipulate the market. Within a five-minute window, the trader deposited $7.167 million across these accounts, leveraging trades on the illiquid JELLY coin.
The strategy involved withdrawing collateral before the platform’s systems could react. However, when the price of JELLY surged by over 400%, the trader’s $4 million short position was liquidated. The scale of the short position was too large to be executed, and it was transferred to the Hyperliquidity Provider Vault (HLP). Meanwhile, the trader withdrew funds from the remaining two accounts.
In response, Hyperliquid imposed restrictions on the trader’s accounts, limiting them to reduce-only orders. This forced the trader to sell assets to mitigate the financial damage. Subsequently, Hyperliquid froze and delisted the JELLY token, effectively locking in the market price at the level of the trader’s short position. This resulted in the complete loss of the floating profits and losses across the first two accounts.
Arkham Intelligence reported that the trader successfully withdrew $6.26 million from the exchange but ultimately faced significant losses due to the failed manipulation attempt.
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