Hyperliquid $6.2M Exploit Exposes Vulnerabilities as DEXs Challenge CEXs

Hyperliquid Exploit Nets Trader $6.26M as DEXs Gain Ground Against Centralized Exchanges

  • A cryptocurrency whale exploited Hyperliquid’s liquidation parameters to make $6.26 million profit on the Jelly my Jelly (JELLY) memecoin.
  • Decentralized exchanges (DEXs) like Hyperliquid are gaining market share against traditional centralized exchanges, causing competitive tension.
  • Despite the exploit raising concerns about DEX security, Hyperliquid ranks as the eighth-largest perpetual futures exchange by volume.

A cryptocurrency trader exploited the Jelly my Jelly (JELLY) memecoin on Hyperliquid, a decentralized exchange, earning at least $6.26 million in profit by manipulating liquidation parameters. According to Cointelegraph, the incident occurred on March 27 and marks the second major exploit on the platform in March, as noted by CoinGecko co-founder Bobby Ong.

- Advertisement -

Ong highlighted the growing tension between centralized exchanges (CEXs) and decentralized platforms in an April 3 X post, stating: "It’s clear that CEXes are feeling threatened by DEXes, and are not going to see their market share erode without putting on a fight." The JELLY incident drew particular attention as Binance and OKX listed perpetual futures for the token, which some viewed as coordinated action against Hyperliquid.

Decentralized Exchanges Reshape the Market

Despite the security concerns, Hyperliquid continues to grow. According to an April 4 research report cited by Ong, Hyperliquid ranks as the eighth-largest perpetual futures exchange by trading volume across both centralized and decentralized platforms, outperforming established players like HTX, Kraken, and Bitmex.

CoinGecko data shows Hyperliquid as the 12th-largest derivatives exchange with over $3 billion in 24-hour open interest, though still significantly behind Binance’s $19.5 billion. This growing market presence is beginning to impact centralized exchanges’ market share.

How the Exploitation Worked

According to blockchain analytics firm Arkham, the whale opened two long positions worth $2.15 million and $1.9 million, alongside a $4.1 million short position that effectively offset the longs. When JELLY’s price surged by 400%, the large short position wasn’t immediately liquidated due to its size but was instead absorbed into Hyperliquid’s Provider Vault (HLP), which is designed to handle large position liquidations.

- Advertisement -

Bitget Research analyst Ryan Lee suggested the incident could damage user confidence in emerging decentralized platforms, especially when post-exploit actions appear centralized. "Hyperliquid’s intervention — criticized as centralized despite its decentralized ethos — may make investors wary of similar platforms," Lee explained.

As of March 27, the unidentified trader still held 10% of the memecoin’s total supply, valued at nearly $2 million, even after Hyperliquid froze and delisted the token, citing "evidence of suspicious market activity" involving trading instruments.

✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.

Previous Articles:

- Advertisement -

Latest News

Fannie Mae, Freddie Mac Now Accept Crypto Assets for Mortgages

Fannie Mae and Freddie Mac will now recognize Bitcoin and other cryptocurrencies as reserves...

AI-Powered Blockchain Activity Soars 86%, Nears Gaming Market Share

Blockchain-based Artificial Intelligence activity has grown by 86% since the beginning of 2025, according...

Maine Attorney General Recovers Thousands in Crypto Scam Case

The Maine Attorney General's Office has recovered thousands of dollars for a victim of...

Coinbase Shares Hit Highest Level Since 2021 Nasdaq Debut

Coinbase stock reached its highest price since its 2021 listing, nearly returning to debut...

BPX Gains FCA Nod to Trade Tokenized Securities in the UK

BPX, a startup focused on trading tokenized securities, received several authorizations from the UK’s...

Must Read

Top 11 Hosting Providers To Buy VPS With Bitcoin And Cryptocurrency

As a full-time blogger with over 5 years of experience and running multiple niche websites, I have gained the necessary expertise when it comes...