Bitget CEO slams Hyperliquid’s handling of “suspicious” incident involving JELLY token
Gracy Chen, CEO of cryptocurrency exchange Bitget, criticized Hyperliquid’s handling of a March 26 incident on its perpetual exchange, saying it put the network at risk of becoming “FTX 2.0.”
On March 26, Hyperliquid, a blockchain network specializing in trading, said it delisted perpetual futures contracts for the JELLY token and would reimburse users after identifying “evidence of suspicious market activity” tied to the instruments.
The decision, which was reached by consensus among Hyperliquid’s relatively small number of validators, flagged existing concerns about the popular network’s perceived centralization.
“Despite presenting itself as an innovative decentralized exchange with a bold vision, Hyperliquid operates more like an offshore [centralized exchange],” Chen said, after saying “Hyperliquid may be on track to become FTX 2.0.”
FTX was a cryptocurrency exchange run by Sam Bankman-Fried, who was convicted of fraud in the US after FTX’s abrupt collapse in 2022.
Chen did not accuse Hyperliquid of specific legal infractions, instead emphasizing what she considered to be Hyperliquid’s “immature, unethical, and unprofessional” response to the event.
“The decision to close the $JELLY market and force settlement of positions at a favorable price sets a dangerous precedent,” Chen said. “Trust—not capital—is the foundation of any exchange […] and once lost, it’s almost impossible to recover.”
Source: Gracy Chen
Related: Hyperliquid delists JELLY perps, citing ‘suspicious’ activity
JELLY incident
The JELLY token was launched in January by Venmo co-founder Iqram Magdon-Ismail as part of a Web3 social media project dubbed JellyJelly.
It initially reached a market capitalization of roughly $250 million before falling to the single digit millions in the ensuing weeks, according to DexScreener.
On March 26, JELLY’s market cap soared to around $25 million after Binance, the world’s most popular crypto exchange, launched its own perpetual futures tied to the token.
The same day, a Hyperliquid trader “opened a massive $6M short position on JellyJelly” and then “deliberately self-liquidated by pumping JellyJelly’s price on-chain,” Abhi, founder of Web3 company AP Collective, said in an X post.
BitMEX founder Arthur Hayes said initial reactions to Hyperliquid’s JELLY incident overestimated the network’s potential reputational risks.
“Let’s stop pretending hyperliquid is decentralised. And then stop pretending traders actually [care],” Hayes said in an X post. “Bet you $HYPE is back where [it] started in short order cause degens gonna degen.”
Binance launched JELLY perps on March 26. Source: Binance
Growing pains
On March 12, Hyperliquid grappled with a similar crisis caused by a whale who intentionally liquidated a roughly $200 million long Ether (ETH) position.
The trade cost depositors into Hyperliquid’s liquidity pool, HLP, roughly $4 million in losses after forcing the pool to unwind the trade at unfavorable prices. Since then, Hyperliquid has increased collateral requirements for open positions to “reduce the systemic impact of large positions with hypothetical market impact upon closing.”
Hyperliquid operates the most popular leveraged perpetuals trading platform, controlling roughly 70% of market share, according to a January report by asset manager VanEck.
Perpetual futures, or “perps,” are leveraged futures contracts with no expiry date. Traders deposit margin collateral, such as USDC, to secure open positions.
According to L2Beat, Hyperliquid has two main validator sets, each comprising four validators. By comparison, rival chains such as Solana and Ethereum are supported by approximately 1,000 and 1 million validators, respectively.
More validators generally lessen the risk of a small group of insiders manipulating a blockchain.
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Voting is under way in local elections across England, as well as in the Runcorn and Helsby by-election.
Due to Ofcom rules, Sky News is limited on what it can report until polls close at 10pm.
The votes mark the first electoral test for the party leaders since last year’s general election.
In total, 23 of England’s 317 local authorities are holding elections, alongside the Isles of Scilly.
The make up of around 1,270 parish councils are also due to be decided.
Read more:
Follow local elections results here
Where are they and how do I vote?
And six metro mayors are up for election.
The West of England, Cambridgeshire and Peterborough, Doncaster, and North Tyneside mayoralties already have a mayor in place – while Greater Lincolnshire and Hull and East Yorkshire are choosing a mayor for the first time.
Meanwhile, a by-election is being held in Runcorn and Helsby after previous Labour MP Mike Amesbury agreed to stand down following his conviction for punching a man in the street.
While this result is likely to come in overnight, most local election results won’t be known until Friday.
All voters in these elections must be over 18, and be registered.
Join Sky News presenter Jonathan Samuels and deputy political editor Sam Coates from midnight as the results start coming in. Lead politics presenter Sophy Ridge, political editor Beth Rigby, and data and economics editor Ed Conway will be taking over on Friday to report and explain what has happened.
North Carolina’s House of Representatives has passed a bill allowing the state’s treasurer to invest public funds in approved cryptocurrencies, which will now head to the Senate.
The House passed the Digital Assets Investment Act, or House Bill 92, on its third reading on April 30 by a vote of 71 to 44.
Republican House Speaker Destin Hall introduced the bill in February, which would allow the treasurer to allocate 5% of the state’s investments into designated digital assets.
The investments can only be made after obtaining an independent third-party assessment confirming that the crypto holdings are maintained with a secure custody solution and risk oversight and regulatory compliance standards are met.
New amendments allow the treasurer to examine the feasibility of allowing members of retirement and deferred compensation plans to elect to invest in digital assets held as exchange-traded products (ETPs).
The House also passed a related bill, the State Investment Modernization Act, or HB 506, with little discussion on April 30, in a 110 to 3 vote.
The bill aims to create the North Carolina Investment Authority (NCIA) to take over investment management from the treasurer.
If passed into law, authority to invest in digital assets would transfer from the treasurer to NICA, and it would require approval from its board of directors based on third-party assessments to make crypto investments.
Local news outlet NC Newsline reported that Treasurer Brad Briner supports both bills.
Arizona leads the crypto bill race
North Carolina is second to Arizona in the state-level race to approve legislation allowing local governments to invest in cryptocurrencies.
Related: New Hampshire Bitcoin reserve bill heads to full Senate vote
On April 28, Arizona’s House approved two bills, SB 1025 and SB 1373, proposing different methods for the state to establish a crypto reserve.
Arizona is the only state whose House and Senate have passed crypto-related bills, which are both awaiting Governor Katie Hobbs’ decision.
Magazine: ZK-proofs unlock trillions in Bitcoin for DeFi — BitcoinOS and Starknet
Nearly 30 crypto advocate groups led by the lobby group the Crypto Council for Innovation (CCI) have asked the Securities and Exchange Commission for clear regulatory guidance on crypto staking and staking services.
The CCI’s Proof of Stake Alliance (POSA) group argued in an April 30 letter to the agency’s Crypto Task Force lead, SEC Commissioner Hester Peirce, that staking is fundamentally a technical process, not an investment activity.
“Staking isn’t niche — it’s the backbone of the decentralized internet,” the letter said.
The letter responded to the SEC’s call for public input on whether staking and liquid staking, where crypto users lock up their tokens to earn more, should be regulated under federal securities laws.
The coalition called for the SEC to support responsible inclusion of staking features in exchange-traded products (ETPs), and “avoid overly prescriptive rules that could freeze market structures and stifle innovation in the staking space.”
The group argued that staking fails to meet the securities-defining Howey test definition of an “investment contract” as stakers retain ownership of their assets.
They added that blockchain protocols, not a staking provider’s efforts, determine rewards, and providers don’t deliver profits through managerial decisions like a company does.
The letter requested that the SEC Issue principles-based guidance similar to recent SEC staff statements on proof-of-work mining.
“In the past 4 months, we’ve seen more movement and constructive dialogue with the SEC than in the past 4 years,” the group said. “Now, the industry is stepping up with concrete principles to include in guidance — a reflection of this new collaborative approach.”
Related: Ethereum ETF staking will have little impact without multimonth rally: Analyst
The group argued that the existing securities disclosure regime is ill-suited for staking services, which are fundamentally technical rather than financial in nature.
Big names in support of staking clarity
The Proof of Stake Alliance includes several high-profile crypto organizations and companies, including the venture capital firm Andreessen Horowitz (a16z), blockchain software firm Consensys, and the crypto exchange Kraken, which restored staking services in the US earlier this year.
The SEC has yet to approve a crypto staking exchange-traded fund (ETF) and delayed the decision on allowing staking for Grayscale’s spot Ether ETF on April 14.
In April, Bloomberg ETF analyst James Seyffart predicted that an Ether ETF that includes staking could come as soon as May.
Magazine: ZK-proofs unlock trillions in Bitcoin for DeFi — BitcoinOS and Starknet
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