Gracy Chen, CEO of Bitget, has criticized Hyperliquid for its recent actions regarding the JELLY token incident, warning it could lead to a situation akin to “FTX 2.0.” On March 26, Hyperliquid delisted perpetual futures for JELLY after discovering suspicious Market activity and promised user reimbursements. Chen highlighted concerns about Hyperliquid’s centralization, stating it operates more like a centralized exchange despite claiming to be decentralized. She emphasized that losing trust is detrimental for any exchange. The JELLY token, launched by Venmo co-founder Iqram Magdon-Ismail, has faced significant Market fluctuations, raising questions about Hyperliquid’s governance and Market handling.
Gracy Chen, the CEO of cryptocurrency exchange Bitget, recently expressed her concerns about Hyperliquid’s management of a serious issue that occurred on March 26. She warned that if not handled properly, Hyperliquid may risk becoming analogous to the notorious FTX exchange, which faced a significant collapse in 2022.
The incident began when Hyperliquid, a blockchain platform known for trading, announced it had delisted perpetual futures contracts for the JELLY token. This decision followed the discovery of suspicious Market activities linked to this cryptocurrency. Hyperliquid communicated that affected users would be reimbursed after conducting an investigation.
Chen highlighted that the way Hyperliquid handled this situation raises alarming questions about the platform’s centralization, which goes against its image as an innovative decentralized exchange. She criticized the exchange’s actions, stating, “The decision to close the JELLY Market and force settlement of positions at a favorable price sets a dangerous precedent.” For her, trust is the key foundation of any exchange, and losing it is incredibly hard to regain.
The JELLY token, which was introduced earlier this year by technology entrepreneur Iqram Magdon-Ismail, witnessed extreme volatility in its Market capitalization. Initially valued at around $250 million, it dramatically dropped before spiking again when Binance, one of the leading cryptocurrency exchanges, launched its perpetual futures linked to JELLY.
Hyperliquid’s troubles didn’t stop there; the platform previously faced a similar predicament earlier in March when a whale trader liquidated a large Ether position, resulting in roughly $4 million in losses for liquidity pool participants.
As of now, Hyperliquid dominates the leveraged perpetual trading Market, holding about 70% of Market share, but it operates with a limited number of validators compared to larger chains like Ethereum. This lack of validators could potentially increase the risk of manipulation on the platform.
For users in the crypto trading landscape, these developments are a stark reminder of the importance of maintaining trust and transparency in exchanges. Hyperliquid needs to reassess its strategies and perhaps enhance its decentralization efforts to avoid reputational damage similar to that suffered by FTX.
Keywords: Hyperliquid, Bitget, cryptocurrency exchange
Secondary keywords: JELLY token, perpetual futures, FTX collapse
What happened with the JELLY token on Hyperliquid?
Recently, there was a suspicious incident involving the JELLY token on the Hyperliquid platform. Bitget’s CEO raised concerns about how Hyperliquid handled the situation.
Why did Bitget’s CEO criticize Hyperliquid?
The CEO criticized Hyperliquid for not addressing the issue quickly and clearly. He believes they should have done more to protect users and ensure transparency.
What are the risks of trading tokens like JELLY?
Trading tokens, especially those that have sudden price changes or suspicious activity, can be risky. Investors need to be aware that they may lose money if things go wrong.
How can users protect themselves when trading?
Users can protect themselves by doing thorough research before trading any tokens. It’s also wise to use secure platforms and keep an eye on news related to their investments.
What should we expect moving forward?
Moving forward, it’s important for platforms like Hyperliquid to improve their security measures and communication. Users will likely pay closer attention to how exchanges handle similar situations in the future.