Yesterday, Hyperliquid was exploited by traders, temporarily facing losses exceeding one million dollars. Ultimately, Hyperliquid liquidated 392 million $JELLY (3.72 million dollars) at a price of 0.0095 dollars, resulting in a profit of 703,000 dollars with no losses incurred. This decision appears reasonable for the protocol, as failing to do so could have led to immeasurable losses. However, it also reveals that Hyperliquid may not be as decentralized as it claims.
Bitget CEO Gracy Chen directly pointed out that Hyperliquid could be FTX 2.0, while on-chain detective ZachXBT questioned Hyperliquid’s inconsistent stance when dealing with North Korean hackers and traders.
(Hyperliquid experienced a short-term net outflow of 140 million dollars, and $HYPE dropped over 25%, reviewing the events surrounding JELLYJELLY)
Bitget CEO: Hyperliquid May Become FTX 2.0
Gracy Chen sternly stated on Twitter: “Hyperliquid may become FTX 2.0, as its handling of the $JELLY incident has been immature, unethical, and unprofessional, resulting in user losses and serious doubts about its integrity. Despite positioning itself as an innovative decentralized exchange with bold visions, its operational methods resemble that of an offshore CEX without KYC/AML, leading to illicit fund flows and bad behavior.”
She further pointed out: “The decision to delist $JELLY and force liquidation at a discounted price sets a dangerous precedent. Trust is the foundation of any exchange (both CEX and DEX), and once lost, it is nearly impossible to restore.”
She noted that the platform’s product design exposes concerning flaws: mixed vaults expose users to systemic risks, and unrestricted position sizes open the door to manipulation. If these issues are not addressed, more altcoins could be used against Hyperliquid, making it potentially the next catastrophic failure in the cryptocurrency space.”
Hyperliquid Community: How Can Centralized Exchanges Talk About Ethics and Transparency?
However, Gracy’s remarks have sparked controversy within the Hyperliquid community. User Wasa.hl stated: “Interestingly, a CEO of a centralized exchange dares to lecture anyone on ethics and transparency. Your platform thrives in the shadows: insider trading, hidden liquidations, and backdoor deals are the norm. You talk about trust, but your users need to trust that you are not abusing their funds, as they cannot verify anything. That is the entire CEX model: trust us, we promise.”
He pointed out the differences between Hyperliquid and centralized exchanges: “On Hyperliquid, CODE is the rule. Every vault, every transaction, every liquidation is recorded on-chain in real-time for anyone to audit. Insider trading is prohibited. No fake trading volume. Mysterious hacking incidents that cause millions to disappear do not happen, nor will anyone go to prison. You say this is immature? No, it is disruptive.”
Finally, he indicated that centralized exchanges are a thing of the past: “This is what you are most worried about: intermediaries will become irrelevant in the future. Therefore, before accusing others, clean up your own issues. From our standpoint, CEXs like yours are not the future: they are the problem, belonging to the past.”
ZachXBT Questions Hyperliquid’s Intervention in Trades While Ignoring North Korean Hackers
Regarding Hyperliquid’s proactive intervention, on-chain detective ZachXBT questioned: “If they are drawing the line here, it is somewhat annoying, but when North Korea opened significant positions using funds hacked from Radiant, the situation was different.”
Elfa.ai’s CMO, Shubit, a long-time Hyperliquid bull, also expressed her opinion on Twitter: “Hyperliquid is not an organization that merely publishes smart contracts online without taking any action. It is a profit machine built over years of effort. The enthusiasts behind it are entrepreneurs who piece together every bit of trading fees to repurchase their tokens because they have a long-term vision.”
She stated that the public uses Hyperliquid not for any ideology but because it operates smoothly, is fast, and makes us money. Don’t act like you are trading the ‘value’ of Hyperliquid.”
As for the traders who exploited the system being blacklisted, she cited an example: “Do you think you can enter someone else’s store, disrupt the place, and not get thrown out? Everyone is enjoying dinner, and then a guy walks in and starts smoking one after another. Of course, you would get thrown out. Is that wrong? Do you really want to shout about decentralization while ruining everyone’s atmosphere? Hyperliquid is a business. They will certainly choose greater interests over some martyr complex trolls.”
Regarding ZachXBT’s questioning of Hyperliquid’s actions against traders while ignoring North Korean hackers, Shubit said: “North Korea will find a way regardless; if CEXs could really catch them, that would be great. If freezing funds could solve any problems, why can’t CEXs always stop them? Why is North Korea so rampant?” She emphasized that Hyperliquid is a profit-driven platform, not a regulatory agency, and you cannot expect private platforms to bear all burdens.
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