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What happened today?

Hyperliquid is back in the headlines with another unfortunate event involving their liquidation engine and malicious actors, this time with Binance and other exchanges in the mix. Earlier today an anonymous user opened a massive short position on an illiquid memecoin called Jelly, then began buying the token onchain causing the price to surge rapidly. Soon after the whale’s position was liquidated and taken on by the Hyperliquid liquidity vault, HLP. On a highly liquid coin such as BTC, positions like this can be instantly closed with relatively little slippage. On something like Jelly, however, this is not the case, and so HLP was left holding a massive short position that it could not close on a coin that was being artificially pumped. It was then announced that Binance would be listing Jelly on its futures platform, making the situation all the more dire for HLP.

So what did they do in the face of what could have been an existential threat? They manually changed their oracle prices for Jelly to reflect a price about 80% lower than the actual market price, which allowed them to close the position for a small profit rather than massive loss. In the short term this protected the platform and its users capital, however they have now set a very dangerous precedent. I think many people knew Hyperliquid was far more centralized than they claimed to be, yet events like this pull back the curtains for all to see. As the dust settles, HLP ends with $700k in profit after all the shenanigans and the anonymous attacker still holds 10% of the supply of Jelly. Fingers are being pointed in every direction as nobody likes taking the heat, and with ZachXBT on the case I have a feeling we’ll find out who was really behind this soon.

Tweet of the Day

The Hyperliquid/Jelly situation today is one of the best collections of shenanigans we’ve had onchain in while.

Biggest Headlines

The Beluga intern has been hard at work gathering all the most important crypto news stories so you have them in one place!

The Majors

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Alt Coins and Stocks

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Regulatory

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• Sen. Gillibrand warns against a ‘watered-down’ stablecoin bill

Miscellaneous

• Why Chronicle, Ethereum’s first oracle, is raising a seed round seven years after launch

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Will McKinnon is the Head of Content for Beluga and has spent every day for many years trading coins. For that reason there are too many to name, however his largest holdings by a significant margin are Ethereum and Bitcoin. NFA DYOR