Crypto Whale Exploits Jelly Memecoin, Makes $6.26 Million

An unidentified crypto whale, who allegedly manipulated the price of the Jelly (JELLY) memecoin on the decentralized exchange Hyperliquid, continues to hold a significant stake in the token. The whale, who exploited the liquidation parameters on Hyperliquid, made at least $6.26 million in profit from the exploit. Despite the substantial gain, the whale still retains nearly $2 million worth of JELLY tokens, which amounts to over 10% of the total supply.

The whale's strategy involved opening three large trading positions within a span of five minutes. These positions included two long positions worth $2.15 million and $1.9 million, respectively, and a $4.1 million short position. The short position effectively offset the long positions, allowing the whale to capitalize on the price manipulation. This maneuver resulted in a significant profit for the whale, highlighting the risks associated with decentralized exchanges and the potential for large-scale investors to exploit market vulnerabilities.

The incident has raised concerns about the security and stability of decentralized exchanges. The exploit on Hyperliquid caused a sudden drop in the price of JELLY, leading to panic among traders. The postmortem report by blockchain intelligence firm Arkham provided insights into the whale's actions, but the identity of the whale remains unknown. The report underscores the need for enhanced security measures and regulatory oversight to prevent similar incidents in the future.

The continued holding of a substantial amount of JELLY tokens by the whale suggests that the investor may have confidence in the long-term prospects of the memecoin. However, the exploit has also raised questions about the integrity of the market and the potential for further manipulation. The incident serves as a reminder of the risks involved in investing in memecoins and the importance of conducting thorough due diligence before making investment decisions.

Despite the fallout, the whale’s five associated addresses continue to hold over $1.9 million worth of JELLY on Solana. The entity has been reported to keep on selling even after the intervention of Hyperliquid. This indicates that the whale may be attempting to mitigate losses or capitalize on the remaining value of the tokens.

The crash highlights the weakness of meme-based tokens. Projects built on speculation, as opposed to utility, will continue to be exposed. The incident serves as a harsh reminder that hype over fundamentals will not last, and investors should be cautious when considering investments in memecoins.

While Hyperliquid’s quick action curbed user collateral damage, critics argue that it toed the line between decentralization and control. The Hyper Foundation has promised to automatically refund most users except for the exploiter’s wallets. This incident is the latest of a growing list of memecoin blowups, just two weeks after a Wolf of Wall Street-themed token fell 99% due to insider distribution.