Hyperliquid Vault Faces Repeated Attack with $Jellyjelly Memecoin

3 mins mins

Key Points:

Hyperliquid faces a second attack as vaults are targeted using Memecoin $Jellyjelly.
The attack involved strategic short positions and airdropped bait.
Mass withdrawals have led to a decreased total value locked.

Hyperliquid, a decentralized perpetual exchange, was struck with another major attack on its vaults when attackers targeted the memecoin $Jellyjelly. The event, which unfolded this week, involves strategic trades that heavily impacted the platform’s financial stability.

The recent attack highlights vulnerabilities within the platform, raising questions about its risk management. The memecoin’s price gained nearly 500% during the situation, according to data, causing significant market turbulence.

Coordinated Assault Slashes Hyperliquid’s TVL by $20 Million

On-chain analyst identified a coordinated attack on Hyperliquid’s vault, involving setting a bait with airdrops and strategic short selling on the memecoin $Jellyjelly. The attack replicated strategies used in a previous incident, targeting less liquid assets for easier price manipulation. A $4.08 million short position was opened on $Jellyjelly, followed by intensive buying waves to increase the vault’s loss, threatening a potential bank run. The attack decreased the total value locked (TVL) by $20 million and dropped the liquidation price to approximately $0.14.

Hyperliquid’s immediate challenges include addressing the significant outflow and restoring user confidence. As per their official statement, validators decided to delist JELLYJELLY perps, attempting to mitigate the damage by promising compensation to affected users. However, the crisis has resulted in roughly $140 million in USDC outflows within hours.

“Despite presenting itself as an innovative decentralized exchange with a bold vision, Hyperliquid operates more like an offshore CEX with no KYC/AML, enabling illicit flows and bad actors,”

said Gracy Chen, CEO of Bitget. source

Regulatory Scrutiny Intensifies Post Attack on Hyperliquid

Did you know? The $Jellyjelly incident marks the second significant challenge for Hyperliquid’s vaults. In March 2025 alone, Hyperliquid faced two major setbacks involving strategic liquidation maneuvers.

According to CoinMarketCap data, Ethereum’s current market indicators reflect continued fluctuations, with a 1.88% decrease over the past day. A 39.44% drop over the past two months highlights the volatility investors face. Presently holding a market cap of approximately $244.09 billion, Ethereum maintains a substantial role in the crypto market as of March 27, 2025. The platform’s liquidations and price shifts remain pivotal indicators among analysts and traders alike.

ethereum-daily-chart-12 — Ethereum(ETH), daily chart, screenshot on CoinMarketCap at 05:56 UTC on March 27, 2025. *Source: CoinMarketCap*

The Coincu research team highlights the implications of this attack on regulatory scrutiny for decentralized exchanges in managing similar vulnerabilities. Historical patterns suggest a need for stronger protective measures, potentially spurring the development of more robust security protocols.