Bitget CEO criticises Hyperliquid’s JELLY incident handling

Bitget CEO Gracy Chen condemned Hyperliquid’s (CRYPTO:HYPE) response to a March 26 incident involving the JELLY token, warning the blockchain network risks becoming “FTX 2.0” due to perceived centralisation.

Hyperliquid delisted JELLY perpetual futures and reimbursed users after identifying “suspicious market activity,” citing consensus among its validators.

“Trust—not capital—is the foundation of any exchange […] and once lost, it’s almost impossible to recover,” Chen argued, warning that Hyperliquid’s actions set a “dangerous precedent.”

The controversy began when a trader opened a $6 million short position on JELLY, then self-liquidated by inflating the token’s price, according to AP Collective founder Abhi.

Hyperliquid’s liquidity pool, HLP, previously lost $4 million in March after a whale liquidated a $200 million ETH position, prompting stricter collateral requirements.

Hyperliquid’s validator structure—two sets of four validators each—has drawn scrutiny compared to chains like Ethereum (CRYPTO:ETH) (1 million validators) and Solana (CRYPTO:SOL) (1,000).

“Let’s stop pretending Hyperliquid is decentralised. Bet you $HYPE is back where [it] started in short order,” BitMEX (CRYPTO:BMEX) founder Arthur Hayes tweeted, dismissing reputational risks.

JELLY’s volatility reflects broader market dynamics.

Launched in January by Venmo co-founder Iqram Magdon-Ismail, the token surged to $250 million before collapsing to single-digit millions.

Binance’s March 26 launch of JELLY perpetual futures briefly lifted its market cap to $25 million.

Hyperliquid controls ~70% of the leveraged perpetuals market, per VanEck, but its centralised decision-making during crises has raised questions about decentralisation.

Chen’s criticism highlights tensions between innovation and transparency in DeFi platforms.

While Hyperliquid’s liquidity pool reported a $700,000 net income post-incident, systemic risks persist.

The network’s reliance on a small validator group contrasts with decentralised competitors, leaving it vulnerable to governance disputes.

At the time of reporting, the Hyperliquid (HYPE) price was $14.72.