Hyperliquid Under Fire: Bitget CEO Warns of "FTX 2.0" After JELLY Crisis

Bitget CEO Gracy Chen warned in a recent X post on March 27 that Hyperliquid "may be on track to become #FTX 2.0" following its handling of the recent $JELLY incident.

Chen criticized Hyperliquid's response as "immature, unethical, and unprofessional," stating it triggered user losses and cast serious doubts over the platform's integrity. She noted that despite its claims of being an innovative decentralized exchange, Hyperliquid "operates more like an offshore CEX with no KYC/AML, enabling illicit flows and bad actors."

The controversy stems from a March 26 incident when Hyperliquid's vault faced a potential $240 million liquidation risk due to price manipulation involving the memecoin $JELLYJELLY. According to reports, attackers opened short positions worth $4.08 million on $JELLYJELLY at $0.0095, manipulated the spot price downward, withdrew $2.76 million in margin, and triggered liquidation.

After Hyperliquid's vault took over the position, the attackers coordinated buy orders, driving $JELLYJELLY prices up by 230%. The situation was complicated when centralized exchanges Binance and OKX listed $JELLYJELLY perpetual contracts, attracting significant trading volume and further increasing price pressure.

Chen emphasized that Hyperliquid's "decision to close the $JELLY market and force settlement of positions at a favorable price sets a dangerous precedent," adding that "Trust—not capital—is the foundation of any exchange (CEX and DEX alike), and once lost, it's almost impossible to recover."

She also highlighted "alarming flaws" in Hyperliquid's design, including "mixed vaults that expose users to systemic risk, and unrestricted position sizes that open the door to manipulation."