6 Shocking Days: Jelly Token Exploit Rocks Hyperliquid

Jelly Token Exploit: A $6M Incident Unfolded

Recently, the decentralized exchange Hyperliquid delisted the Jelly-my-Jelly (JELLY) memecoin amid a shocking $6 million exploit. This incident raises crucial questions about security and oversight in the DeFi space.

Background and Context

The recent Hyperliquid Jelly token exploit, which led to a staggering $6 million loss on the decentralized exchange Hyperliquid, has raised serious concerns in the decentralized finance (DeFi) community. This incident comes in the wake of unprecedented exploits in 2025, notably the Bybit hack that saw North Korean hackers siphoning off $1.4 billion. Such events underline the vulnerability of DeFi platforms and the pressing need for improved oversight and security measures.

The Jelly token was launched by Venmo co-founder Iqram Magdon-Ismail as part of the JellyJelly Web3 social media project. Following its launch on January 30, the token price plummeted, reminiscent of past meme coin failures. The exploit itself unfolded rapidly, with the market being abruptly closed during a short squeeze, raising parallels to the collapse of FTX just two years prior. Market observers have criticized Hyperliquid’s handling of the incident, labeling it unprofessional and unethical, leading to comparisons with FTX. This incident highlights the volatile nature of hype-driven tokens in the DeFi space and emphasizes that without solid fundamentals, such projects are inherently at risk.

Timeline of the Hyperliquid Jelly Token Exploit

The recent Hyperliquid Jelly token exploit has raised significant concerns within the decentralized finance (DeFi) sector. On March 26, the Jelly-my-Jelly (JELLY) memecoin faced a catastrophic short squeeze, leading to the decentralized exchange Hyperliquid delisting the token. Initial trading of JELLY had seen a price surge to $0.21 after its launch on January 30, but by March 10, it plummeted to just $0.01. This drastic fall underscores serious vulnerabilities within the DeFi market.

How the Exploit Unfolded

According to Arkham Intelligence, the exploit began with a series of withdrawals from flagged accounts. As Hyperliquid quickly restricted these accounts, the exploiter opted to sell off their remaining JELLY holdings. As panic spread, Hyperliquid halted trading around the $0.0095 mark—right at the entry point for the short trades made by a third account. The exchange stated, “All users apart from flagged addresses will be made whole from the Hyper Foundation.” However, while they acknowledged a $700,000 positive income from HLP over the last 24 hours, critics expressed dissatisfaction with how Hyperliquid handled the situation.

Community Reactions

Many industry leaders voiced their concerns. Gracy Chen, CEO of Bitget, labeled Hyperliquid’s response as “immature, unethical, and unprofessional,” likening it to the infamous FTX collapse. “The Jelly incident is a clear reminder that hype without fundamentals doesn’t last,” said Alvin Kan, Chief Operating Officer at Bitget Wallet. On social media, Arthur Hayes, founder of BitMEX, cast doubt on the notion of Hyperliquid’s decentralization, implying that the reactions were exaggerated.

This incident, if not addressed adequately, could serve as a cautionary tale for future projects in the DeFi space.

Analysis of the Hyperliquid Jelly Token Exploit

The recent exploit involving the Hyperliquid Jelly token serves as a stark reminder of the vulnerabilities present in the decentralized finance sector. With suspicious trading activity leading to a $6 million loss, the situation raises critical questions about platform security and user protection in DeFi. The rapid decline of the Jelly token price from $0.21 to $0.01 within ten days exemplifies the inherent risks associated with hype-driven assets. Market observers, including prominent figures like Gracy Chen of Bitget, have criticized Hyperliquid’s handling of the incident, warning of its potential to become the next FTX.

For investors and market participants, this event underscores the importance of conducting thorough due diligence before engaging with new tokens. As the market faces increasing scrutiny, platforms must prioritize transparency and robust risk management to regain user trust. The Hyperliquid Jelly token exploit not only highlights the fragility of the current DeFi landscape but also emphasizes the necessity for improved oversight as the industry evolves.