Why Hyperliquid Isn't the New FTX

Bitget CEO stated that Hyperliquid, which yesterday forcibly closed significant positions at non-market prices, is following in FTX's footsteps.

If you missed it, here's the short version: Hyperliquid validators delisted JELLY, forcibly closing all positions at inflated prices. Short position holders avoided losses, while long position holders missed out on expected profits.

However, comparing this incident to FTX isn't accurate. Major exchanges like FTX never openly manipulated prices so blatantly. Hyperliquid's action is unprecedented.

At first glance, it might seem harmless (missed profits aren't always seen as actual losses), but that's not the case.

On every platform, arbitrage traders play a crucial role by aligning market prices across platforms. Without them, token prices would vary wildly between markets. For instance, when initiating a swap on rabbit.io, you can always look at any trading platform and verify that our rates match market prices. Imagine having to check countless platforms before each swap!

Yesterday, arbitrage traders holding JELLY longs on Hyperliquid and shorts elsewhere faced direct losses on shorts without gaining expected profits from longs - causing real harm.

After this, what arbitrageur would trust Hyperliquid again? Without arbitrage, market pricing collapses. Hyperliquid risks not just an FTX-like fate but total market chaos.