- Arthur Hayes calls HYPE a “David vs. Goliath” in response to recent controversies
- Hyperliquid faces backlash after delisting JELLY token following manipulation allegations
- Blockchain investigator ZachXBT points to Binance-linked wallets to the scheme
BitMEX co-founder Arthur Hayes threw his weight behind Hyperliquid’s HYPE token, framing its struggle as a “David vs. Goliath” battle.
Referencing potential rivals, Hayes commented on social media, “…humans like than to support an underdog vs. a perceived unstoppable opponent. $HYPE for the win!” – associating his support with Hyperliquid’s native token.
What Sparked the Hyperliquid Controversy?
Hyperliquid’s problems began after alleged whale manipulation of the JELLY token price reportedly led to a short squeeze. This event resulted in potential losses nearing $10 million for the exchange’s liquidity providers (LPs), according to reports.
And then, what has now become controversial, Hyperliquid’s validator team voted to delist JELLY perpetual contracts and forcibly settle open positions at a predetermined price.
Despite the significant potential LP losses from the manipulated trades, the Hyperliquid liquidity pool (HLP) vault itself reportedly still secured an overall profit of $700K.
Related: Hyperliquid Bitcoin Whale Speculated to be a Cybercriminal
Forced Settlement Sparks Backlash, ‘Dangerous Precedent’ Fears
While Hyperliquid assured users it intends to refund affected LPs (explicitly excluding the alleged manipulators), the decision to intervene and force-settle trades drew significant backlash online.
Critics accused the DEX team of unprofessionalism and centralization, with some drawing comparisons to the arbitrary actions seen during FTX’s collapse.
Echoing these concerns, Bitget CEO Gracy Chen argued that the move—closing a market and dictating a settlement price—set a “dangerous precedent” for decentralized platform interventions.
ZachXBT Points to Potential Binance-Linked Wallets in Manipulation
Adding complexity to the situation, on-chain analyst ZachXBT pointed to potential involvement of Binance-linked wallets in the manipulation scheme.
Related: Want to Message Binance’ CZ? It Now Costs ~$120 After Spam Flood
His findings publicly identified two specific wallet addresses as key players purportedly initiating the JELLY incident, which further sparked speculation about coordinated market manipulation involving larger entities or their associates.
DEX Decentralization vs. Stability: An Ongoing Debate
The Hyperliquid controversy reignites debates about the inherent challenges DEX platforms face. Balancing open market access with maintaining integrity, transparency, and stability against sophisticated manipulation attempts remains a difficult tightrope walk.
Supporters like Hayes view Hyperliquid’s response as decisive action in a tough situation, showcasing resilience. Conversely, critics question the platform’s risk management frameworks and whether the intervention undermines its claims of decentralization.
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