Bitget CEO Gracy Chen has issued a stern warning about Hyperliquid, suggesting that it could be on its way to becoming the next FTX following its handling of the recent JELLY incident. Gracy slammed the platform’s response in a scathing statement, calling it “immature, unethical and unprofessional.” Hyperliquid, which presents itself as an innovative decentralized exchange, has come under fire for its operational practices that are similar to offshore centralized exchanges (CEX). The crux of the debate revolves around Hyperliquid’s decision to halt trading of JELLY and force positions to be closed at a price favorable to the exchange. Gracy argues that such actions set a dangerous precedent and erode user trust, which is a key element for any exchange, centralized or decentralized. Beyond the JELLY incident, Gracy pointed out fundamental flaws in Hyperliquid's product design: Mixed vaults: These expose users to systemic risks by mixing different assets together without adequate risk separation. Unrestricted position sizes: This feature leaves the platform vulnerable to price manipulation and utilitarian trading strategies. Gracy warns that if these issues are not addressed, more altcoins could be weaponized against Hyperliquid, potentially leading to its downfall. The recent JELLY attack on Hyperliquid involved a sophisticated trading strategy that could have resulted in over $10 million in losses for the platform. Here is a step-by-step analysis: The attacker (0xde95) opened a large short position in JELLY perpetual futures, predicting that the price will fall. Simultaneously, they purchased JELLY spot tokens on-chain to artificially inflate the spot price. Related News: Veteran Analyst il Capo Expects a 50 Percent Rally in One Altcoin and a Pump, Then a Dump in Another The attacker triggered a self-liquidation by intentionally removing margin from the short position. Since Hyperliquid’s HLP acted as a counterparty during liquidations, it took over the attacker’s massive short position (~$4.5 million). The attacker continued to buy spot JELLY, pushing the price even higher. HLP’s acquired short position lost value. A parallel long position was opened by a second wallet. JELLY’s low liquidity amplified the price action, making HLP’s losses even more severe. Small on-chain purchases pushed the price up disproportionately, pushing HLP’s losses to over $10 million. Hyperliquid closed its short position just in time, delisted JELLY and closed with a profit of approximately $700,000. *This is not investment advice. Continue Reading: Cryptocurrency Exchange CEO Warns Harshly About The Popular Platform – “It Could Be The Second FTX Case”
