Hyperliquid, a decentralized perpetuals exchange, faced a significant challenge when a whale manipulated the $JELLY memecoin, leading to a potential $15 million loss. The exchange's response to this attack sparked controversy within the DeFi community, particularly around issues of decentralization and the use of oracles. The whale exploited Hyperliquid by depositing $7.17 million across three accounts and opening opposing long and short positions on the illiquid $JELLY token. The $4.1 million short position was too large to liquidate normally, leading Hyperliquid to force-close the market at the short's entry price, effectively nullifying the whale's gains. This action by Hyperliquid raised questions about the integrity and decentralized nature of the platform. Critics argued that the move was hypocritical, as it went against the principles of DeFi, while others justified it as a necessary measure to protect the platform's users and stability. Doug Colkitt, Founder and CEO of Ambient Finance, provided insights into the mechanics of perpetual swaps and the implications of Hyperliquid's response.