Hyperliquid, a decentralized exchange, faced a big problem when the price of meme coin JELLYJELLY suddenly jumped by 500%. It looked like someone was manipulating the market, putting the exchange at risk of losing $12 million. But before things got worse, Hyperliquid’s team stepped in, fixed the issue, and turned the loss into a $700K profit. To stop any more trouble, they shut down trading for JELLYJELLY.
How One Whale Nearly Broke the System
The chaos started when a trader holding 124.6 million JELLYJELLY tokens, worth $4.5 million, placed an $8 million short bet on Hyperliquid. This forced the platform’s liquidity vault to take on the risk. But then, another wallet likely controlled by the same trader opened a massive long position at the same time. This caused JELLYJELLY’s price to skyrocket, leading to mass liquidations and huge profits for the trader. Arkham later revealed that this was a deliberate strategy to exploit leverage and drain funds from Hyperliquid.
Hyperliquid just got exploited. What happened?
A trader deposited $7.167M on 3 separate Hyperliquid accounts within 5 minutes of each other. He then made leveraged trades on an illiquid coin, JELLYJELLY.
But the plan backfired when the trader’s accounts were restricted to reduce-only orders. This meant they could no longer open new trades and had to start selling off tokens from the first account to recover some of their funds, despite still having millions in unrealized gains.
The attacker’s last withdrawal was at 12:43 UTC. However, he continued to attempt withdrawals – but was unable to, since his account was restricted to reduce-only orders at 12:50 UTC.
However, his accounts still had millions of dollars in unrealized PnL.
As JELLYJELLY’s price kept climbing, Hyperliquid’s liquidity vault faced the risk of a massive wipeout. If the token’s market cap kept rising, the vault could have lost everything. Seeing the surge in trading, major exchanges like Binance and OKX stepped in, listing perpetual futures for JELLYJELLY to capitalize on the hype.
Hyperliquid Pulls the Plug
With the situation escalating, Hyperliquid validators stepped in and reset JELLYJELLY’s price to $0.0095—the level where the whale had originally placed their short position. This allowed the platform to liquidate 392 million JELLYJELLY tokens, converting a multi-million-dollar disaster into a manageable $703K profit.
However, to prevent further manipulation, Hyperliquid immediately closed all open JELLYJELLY positions and removed the token from its platform. The team also promised to reimburse affected users, with compensation set to be distributed automatically, except for flagged addresses suspected of being involved in the scheme.
A Blow to Hyperliquid’s Reputation?
Hyperliquid’s response to the crisis drew mixed reactions. Some praised its quick action, while critics like Bitget CEO Gracy Chen argued it acted more like a centralized exchange. BitMEX co-founder Arthur Hayes also questioned the handling of the situation.
This marks Hyperliquid’s second major liquidity scare in just two weeks. Earlier, a whale’s $200 million Ethereum long liquidation caused a $4 million loss for its liquidity vault. The repeated turmoil has shaken confidence, sending Hyperliquid’s native token, HYPE, down over 12% in a day and over 30% for the month.
Never Miss a Beat in the Crypto World!
Stay ahead with breaking news, expert analysis, and real-time updates on the latest trends in Bitcoin, altcoins, DeFi, NFTs, and more.
Regulatory sandboxes have emerged as a concept to drive innovation in a controlled setting. They allow companies to test new crypto products and services while regulators observe and adapt regulations. While jurisdictions like the UK, the UAE, and Singapore have already created sandboxes, the US has yet to create one at the federal level.
BeInCrypto spoke with representatives of OilXCoin and Asset Token Ventures LLC to understand what the US needs to build a federal regulatory sandbox and how it can unify a fragmented testing environment for innovators.
A Patchwork Approach
As the name suggests, regulatory sandboxes have emerged as a tool for providing a controlled testing ground. This environment allows entrepreneurs, businesses, industry leaders, and lawmakers to interact with new and innovative products.
According to the Institute for Reforming Government, 14 states in the United States currently have regulatory sandboxes for fintech innovation.
Of those, 11 are industry-specific and cover other sectors like artificial intelligence, real estate, insurance, child care, healthcare, and education.
Utah, Arizona, and Kentucky are the only jurisdictions among these states with an all-inclusive sandbox. Meanwhile, all but 12 states are currently considering legislation to create some regulatory sandbox for innovation.
Due to its relatively short existence, the crypto market has underdeveloped legislation. While state-level sandboxes enable innovators to demonstrate their products’ capabilities to the public, they are significantly constrained by the lack of federal regulatory sandboxes.
The Need for Federal Oversight
Though statewide efforts to create regulatory sandboxes are vital for innovation, entrepreneurs and businesses still face constraints in developing across borders or reaching an audience at a national level.
Rapid advancements in fields like blockchain and artificial intelligence (AI) add a particular layer of uncertainty, given that existing legal frameworks may not be well-suited to these technologies.
At the same time, regulators may face difficulties in developing appropriate rules for these technologies due to a potential lack of familiarity with these constantly changing industries.
As a result, industry participants are increasingly calling for creating a federal regulatory sandbox. This environment could be a collaborative framework to address the gap, facilitating communication and knowledge sharing between regulators and industry stakeholders.
“The implementation of a federal regulatory sandbox in the United States has the potential to significantly enhance both innovation and regulatory oversight by reducing the uncertainties often associated with navigating the regulatory landscape across state lines. Such an initiative could help establish a coherent framework characterized by uniformity, continuity, and a conducive environment for innovation,” said Paul Talbert, Managing Director of ATV Fund.
According to Rademacher and Talbert, this proposal would meet the needs of all players involved.
Benefits of a Federal Regulatory Sandbox
A sandbox provides innovators with a controlled environment to test products under regulatory oversight without the immediate burden of full compliance with rules that may not yet fit their technology.
It also allows regulators to acquire firsthand insights into blockchain applications, facilitating the creation of more knowledgeable and flexible regulatory policies.
“Startups should have clear eligibility criteria to determine their qualification for participation, while regulators must outline specific objectives—whether focused on refining token classification frameworks, testing DeFi applications, or improving compliance processes,” Rademacher said.
It could also help the United States reinforce its position as a leader in technological innovation.
“By fostering innovation through simplicity, regulatory certainty, and conducive environments, the United States can significantly strengthen its competitive position in the global fintech landscape,” Talbert added.
While the United States has stalled in creating a federal framework for fintech innovation, other jurisdictions around the world have already gained significant ground in this regard.
Global Precedents
The Financial Conduct Authority (FCA), which regulates the United Kingdom’s financial services, launched the first regulatory sandbox in 2014 as part of Project Innovate. This initiative aimed to provide a controlled environment for testing innovative products.
The government asked the FCA to establish a regulatory process to promote new technology-based financial services and fintech and ensure consumer protection.
The United Arab Emirates (UAE) and Singapore, in particular, have made progressive strides in creating federal regulatory sandboxes.
The UAE, for example, currently has four different sandboxes: the Abu Dhabi Global Market (ADGM) Regulation Lab, the DSFA Sandbox, the CBUAE FinTech Sandbox, and the DFF Regulation Lab.
Their focus areas include digital banking, blockchain, payment systems, AI, and autonomous transport.
Meanwhile, the Monetary Authority of Singapore (MAS) launched its Fintech Regulatory Sandbox in 2016. Three years later, MAS also launched the Sandbox Express, providing firms with a faster option for market testing certain low-risk activities in pre-defined environments.
“The success of regulatory sandboxes in jurisdictions such as the United Kingdom, Singapore, and the United Arab Emirates has highlighted the importance of key attributes: regulatory collaboration, transparent processes, continuous monitoring, and the allocation of dedicated resources. As a result, a growing number of jurisdictions worldwide are looking to replicate the frameworks established by these pioneering countries to strengthen their competitive position in the global fintech landscape,” Talbert said.
Rademacher believes these jurisdictions’ innovations should prompt the United States to accelerate its progress.
For that to happen, the United States must overcome certain hurdles.
Challenges of a Fragmented US Regulatory Landscape
A fragmented network of federal and state agencies overseeing financial services presents a key challenge to establishing a US federal regulatory sandbox.
“Unlike other countries with a single financial authority overseeing the market, the U.S. has multiple agencies—including the SEC, CFTC, and banking regulators—each with different perspectives on how digital assets should be classified and regulated. The lack of inter-agency coordination makes implementing a unified sandbox more complex than in jurisdictions with a single regulatory body,” Rademacher told BeInCrypto.
Yet, in recent years, important SEC and CFTC actors have expressed interest in adopting a more favorable regulatory approach to innovation.
“Even though I tend to be more of a beach than a sandbox type of regulator, sandboxes have proven effective in facilitating innovation in highly regulated sectors. Experience in the UK and elsewhere has shown that sandboxes can help innovators try out their innovations under real-world conditions. A sandbox can provide a viable path for smaller, disruptive firms to enter highly regulated markets to compete with larger incumbent firms,” Peirce said in a statement last May.
However, the full scope of national regulations far exceeds the authority of these two entities.
Congressional and Constitutional Hurdles
Any legislative measure to develop a federal regulatory framework for sandboxes in the United States would have to undergo Congressional approval. Talbert highlighted several potential constitutional dilemmas the promotion of an initiative of this nature may face.
“These dilemmas include issues related to the non-delegation doctrine, which raises concerns about the constitutionality of delegating legislative power; equal protection considerations under the Fifth Amendment’s Due Process Clause; challenges arising from the Supremacy Clause; and implications under the Administrative Procedure Act (APA) and principles of judicial review,” he said.
To address these complexities, Congress must enact clear legal boundaries that ensure a regulatory framework is both predictable and open. Given the current administration’s emphasis on technological innovation, the prospects for creating a sandbox appear positive.
“Given the current composition of Congress, which aligns with the political orientation of the new executive branch, there may be a timely opportunity for regulatory reform. Such reform could facilitate the creation of a cohesive federal regulatory framework and enhance collaboration among federal agencies,” Talbert told BeInCrypto.
However, creating a federal regulatory sandbox is not a one-size-fits-all solution.
Balancing State Autonomy and Federal Regulations
State autonomy is enshrined in the US Constitution. This protection means that, even though a regulatory sandbox may exist at the national level, individual states still have the authority to restrict or prohibit sandboxes within their jurisdictions.
Encouragingly, most US states are already exploring regulatory sandboxes, and the states that have already implemented them represent diverse political viewpoints.
However, other considerations beyond political resistance must also be addressed.
“A federal regulatory sandbox might also face opposition from established financial institutions, including banks, which may perceive potential threats to their existing business models. Furthermore, federal budgetary constraints could impede the government’s capacity to support the development and maintenance of a federal regulatory framework,” Talbert added.
Effective federal regulations will also require a balance between businesses’ concerns and regulators’ responsibilities.
“The two biggest risks are overregulation—imposing excessive restrictions that undermine the sandbox’s purpose—or underregulation, failing to provide meaningful clarity. If the rules are too restrictive, businesses may avoid participation, limiting the sandbox’s effectiveness. If they are too lax, there is a risk of abuse or regulatory arbitrage. A well-executed federal regulatory sandbox should not become a bureaucratic burden but rather a dynamic framework that fosters responsible growth in the digital asset space,” Rademacher told BeInCrypto.
Ultimately, the best approach will require coordination from different governing bodies, industry stakeholders, and bipartisan collaboration.
Fostering Collaboration for a Successful Sandbox
Due to recent strained communication between tech and federal agencies, Rademacher believes fostering a cooperative atmosphere is essential for creating a functional federal sandbox.
“The approach must be collaborative rather than adversarial. Agencies should view the sandbox as an opportunity to refine regulations in real time, working alongside industry participants to develop policies that foster responsible innovation. Involvement from banking regulators and the Treasury Department could also be valuable in ensuring that digital assets are integrated into the broader financial system in a responsible manner,” he said.
Achieving this requires a bipartisan approach to harmonizing regulatory goals and setting clear boundaries. Industry collaboration with lawmakers and regulators is vital to showing how a sandbox can promote responsible innovation while safeguarding consumers.
“Its success will ultimately depend on whether it serves as a bridge between innovation and regulation, rather than an additional layer of complexity,” Rademacher concluded.
In the current market uncertainty, whale interest appears to have shifted to CAKE, the native token of PancakeSwap. Recently, data from the on-chain analytics firm Santiment reported that PancakeSwap leads all assets in whale activity, having skyrocketed over the past week.
Whale Activity in CAKE Surges 440%
The report revealed that the percentage change in transactions made by whale wallets holding over $100,000 worth of CAKE increased by 439.71% over the past week, followed by HEX and Mantle (MNT), which recorded jumps of 275% and 144.44%, respectively, during the same period.
Source: Santiment
However, this massive whale activity might be the reason behind CAKE’s 56% upside momentum in the past week, while major assets like Bitcoin (BTC), Ethereum (ETH), and XRP struggled to gain traction. Besides this strong rally, CAKE appears to be following a similar pattern.
Current Price Momentum
On March 22, 2025, the asset surged over 4.5% in the past 24 hours and is currently trading near $2.70. During the same period, its trading volume increased by 15%, indicating higher participation from investors and traders compared to the previous day.
With the massive price surge in recent days, CAKE has reached a crucial resistance level with a strong history of price reversals. In other words, this level has previously acted as a significant selling pressure zone.
Pancakeswap (CAKE) Technical Analysis and Upcoming Levels
According to expert technical analysis, CAKE has reached a strong resistance level at $3 and has been consolidating near this level for the past three days. Based on recent price action and historical momentum, if CAKE breaches this resistance and closes a daily candle above $3.05, there is a strong possibility that the asset could soar by 45% to reach $4.30 in the coming days.
Source: Trading View
On the other hand, if it fails to break the resistance, the asset could repeat its historical pattern and experience a price decline. Additionally, CAKE is now trading above the 200 Exponential Moving Average (EMA) on the daily timeframe, indicating that the asset is in an uptrend.
The post PancakeSwap (CAKE) Surges 56% as Whale Activity Explodes, 45% Rally Ahead? appeared first on Coinpedia Fintech News
In the current market uncertainty, whale interest appears to have shifted to CAKE, the native token of PancakeSwap. Recently, data from the on-chain analytics firm Santiment reported that PancakeSwap leads all assets in whale activity, having skyrocketed over the past week. Whale Activity in CAKE Surges 440% The report revealed that the percentage change in …
On March 20, 2025, an important meeting took place between David Sacks, the US Special Advisor on AI and Crypto, and Sheikh Tahnoon Bin Zayed Al Nahyan, the Chairman of Abu Dhabi’s investment fund MGX.
This meeting marked significant progress in technological cooperation between the US and the UAE and created new opportunities in artificial intelligence (AI) and cryptocurrency.
What Did David Sacks and Sheikh Tahnoon Discuss?
Sheikh Tahnoon is a powerful figure in the UAE. He is the brother of the UAE President and serves as the country’s National Security Advisor. He also chairs MGX, an investment fund established in 2024 to promote AI and blockchain technologies.
In a post on X (formerly Twitter), Sheikh Tahnoon stated that he and David Sacks discussed AI development, the role of digital currencies, and investment opportunities.
“I explored with David Sacks, the Special Advisor on AI and Crypto, the transformative effects of artificial intelligence across various sectors, the expanding role of digital currencies in reshaping financial systems, and the investment opportunities emerging at their convergence,” Sheikh Tahnoon said.
This meeting took place just one week after MGX announced a $2 billion investment in Binance, the world’s largest cryptocurrency exchange. Notably, MGX conducted this investment using stablecoins, making it the largest crypto-based investment transaction ever.
Under Sheikh Tahnoon’s leadership, MGX is emerging as a major AI investor with allocations across various AI sectors. According to The Wall Street Journal, MGX is expected to receive over $50 billion from Sheikh Tahnoon’s personal assets and other sources in Abu Dhabi.
Additionally, MGX is one of the key backers of Stargate, a $100 billion data center project led by SoftBank and OpenAI, announced at the White House. The fund has also invested in OpenAI, Elon Musk’s xAI, and Amazon-backed Anthropic.
This meeting was part of a broader series of diplomatic engagements between the US and the UAE. On March 18, President Trump announced on TruthSocial that he had hosted Sheikh Tahnoon for dinner at the White House. They discussed economic and technological cooperation.
“Discussions also included ways for our countries to increase our partnership for the advancing of our economic and technological futures,” President Trump stated.
Additionally, reports have recently surfaced suggesting that the Trump family is negotiating to acquire a stake in Binance.US. However, CZ, the former Binance CEO, has denied these claims. Meanwhile, World Liberty Financial, a DeFi project linked to the Trump family, has been continuously investing in projects like Avalanche, Mantle, Sui Blockchain, and Movement.
