Bitget CEO Gracy Chen Warns Hyperliquid Could Be the Next FTX

The event began when a trader on Hyperliquid opened a $6 million short position on JellyJelly. The same trader later boosted the token’s on-chain price, which caused their position to be liquidated.

In response, Hyperliquid removed its perpetual futures contracts for JELLY and said it would compensate users affected by what it described as "suspicious market activity".

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While the decision was reportedly approved by the network’s validators, critics pointed out that the group is small, which raises questions about how decentralized the process really is.

Chen said the response showed a lack of professionalism and claimed it could damage long-term trust. She also suggested Hyperliquid could be heading in a similar direction as the failed crypto exchange FTX if such decisions continue. In her view, platforms that appear decentralized but act more like centralized exchanges carry serious risk.

The JELLY token was launched in January by Venmo co-founder Iqram Magdon-Ismail as part of a social Web3 project called JellyJelly. The token reached a $250 million market cap, but quickly dropped to single-digit millions.

Its value briefly surged to around $25 million on March 26 after Binance $5.36B introduced its own perpetual futures for JELLY.

On March 25, Crypto.com faced backlash from crypto sleuth ZachXBT after restoring 70 billion Cronos tokens that had been removed in 2021. What did he say? Read the full story.