Hyperliquid, Binance, OKX, and Jellyjelly (what?)

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Good Morning.

The market is doing alright, but it seems that the STABLECOIN ACT would prohibit US-compliant stablecoins from providing yield. It remains true that our space final boss is the securitization law. Keep fighting on.

In Today's Email:

• What Matters: Hyperliquid vs JELLYJELLY 🐋 

• Founders Highlight: Vaibhav of Capx 👨 

• Deal Flow: GameStop’s BTC $1.3B Convertible Note 💰️ 

You read and share. We listen and improve. Send us feedback at [email protected].

TOGETHER WITH

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WHAT MATTERS

Hyperliquid vs JELLYJELLY

State of play: Decentralized perpetuals exchange Hyperliquid delisted its JELLYJELLY futures contract after a coordinated whale manipulation event triggered massive unrealized losses of about $12M in the platform’s community-owned HLP vault.

• The incident marks the second such event in March targeting Hyperliquid.

• The manipulation began when wallet 0xde96 opened a large short position on JELLYJELLY, timed with a whale dumping the token on decentralized exchanges, causing the price to plummet.

• As the short entered liquidation, the oversized vault absorbed the HLP position. A second wallet, 0x20e8, then went long on JELLYJELLY as the price rebounded, worsening the vault’s exposure.

• This strategic move allowed the exploiter to deposit $7.17M across three wallets and withdraw $6.26M, leaving an unrealized PnL of ~$900K still locked on the platform.

• One wallet (0x20e8) gained $900K, while two others lost $167K and $767K, respectively.

Simultaneously, Binance and OKX listed JELLYJELLY perps, potentially escalating the risk to Hyperliquid. The protocol reacted swiftly, halting trading and freezing the contract, citing suspicious activity.

• Hyperliquid later announced that non-flagged users would be made whole by the Hyper Foundation and revealed a 24-hour P&L loss of approximately $700K USDC.

• The attacker’s last successful withdrawal was at 12:43 UTC, and he was restricted to reduce-only mode by 12:50 UTC.

• Hyperliquid ultimately closed the JELLYJELLY market at the short’s entry price, nullifying any floating P&L on the attacker’s accounts.

• If the exploiter eventually withdraws the remaining funds, his net profit would be just $4K. If not, he stands to lose nearly $1M.

What’s next: Hyperliquid has promised technical improvements and greater resilience moving forward.

For builders and investors: Understand the difference in approach that one is taking around building a product. Hyperliquid is centralized, period; but it’s a damn good product — this was a conscious choice they made when designing the product.

BUILDER-INVESTOR HIGHLIGHT

Vaibhav Tyagi of Capx

Intro: Vaibhav Tyagi is the founder of Capx, an Ethereum L2 to build, own & trade AI agents.

Previous background: Tyagi is a creative entrepreneur and brand strategist with experience leading and consulting for various ventures. He co-founded Airbucks, a studio known for unorthodox design projects, and Kartavye, a social impact initiative.

• He served as VP of Brand Strategy at Stickman Services and worked as a freelance brand consultant for firms like Performance Launchpad and Kawa Space.

The big idea: Tyag,i through Cap,x is aiming to build the leading blockchain for building, owning,g and trading AI Agent apps.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

STABLE Act 2025: Key Restrictions and Regulatory Framework for Stablecoins

State of play: The STABLE Act of 2025 introduces a comprehensive federal framework for regulating payment stablecoins in the U.S. Key provisions include:

• No Interest or Yield: Permitted stablecoin issuers are prohibited from paying interest or yield to holders.

• Issuer Requirements: Only federally approved banks, credit unions, or certified nonbank subsidiaries can issue payment stablecoins. Nonbanks must be approved under Section 5 and termed “Federal qualified nonbank payment stablecoin issuers.”

• 1:1 Reserves Mandate: Issuers must hold fully backed reserves in cash or short-term U.S. Treasuries (93 days or less).

• 2-Year Transition Period: A two-year grace period from enactment allows custodial intermediaries time to comply. Afterward, they may only offer or sell stablecoins issued by permitted issuers.

• Ban on Algorithmic (Endogenously Collateralized) Stablecoins: There’s a two-year moratorium on issuing new algorithmic stablecoins that didn’t exist at the time of enactment.

• Federal-State Coordination: State regulators may certify their own stablecoin regimes if they meet or exceed federal standards. States can enter into agreements with federal regulators for joint oversight.

• Interoperability Standards: Regulators may set technical standards to promote interoperability and compatibility between stablecoin systems.

Overall, the Act prioritizes consumer protection, financial stability, and regulatory oversight, effectively sidelining yield-bearing and algorithmic stablecoins while reinforcing fiat-backed models under strict supervision.

DEAL FLOWS

GameStop Joins BTC Trend with $1.3B Convertible Note Offering

Deal flows remained steady this week - we saw $145M in deals 💼 

GameStop is embracing Bitcoin as a treasury reserve asset, announcing a $1.3B convertible note offering to fund future BTC acquisitions.

• The notes, due in 2030 and interest-free, target institutional investors, with an option to extend the offering by $200M.

• This move follows similar treasury strategies by "Strategy", whose chairman, Michael Saylor, welcomed GameStop with a post on X.

• GameStop currently holds $4.75B in cash and reported $131.3M in net income for Q4.

• This marks GameStop’s second foray into crypto after shuttering its NFT marketplace in early 2024 due to regulatory issues.

• The stock surged 11% on the news before dropping 5.5% in after-hours trading.

Deal flows in the past week:

• Tarta Labs (Spot Zero), $4.5M Pre-Seed Round

• De Charge, $2.5M Seed Round

• Chronicle Labs, $12M Seed Round

• Betterx, $1.7M Series A

• CoreSky, $15M Series A

• Fragmetric, $5M Strategic Round

• Rain, $24.5M Strategic Round

• Stable Jack, $1.25M Public Token Sale

• Arcium, $4M Public Token Sale

• Skate, $1M Community Round

• Magpie Protocol, $1.6M IDO Round

• Immortal Rising 2, $3M Undisclosed Round

• Capx AI, $3.14M Undisclosed Round

• Hibit, $5M Undisclosed Round

• Warlock, $8M Undisclosed Round

• Abound, $14M Undisclosed Round

• Tabit, $40M Undisclosed Round

QUICK BITES

• Maven11 raises $107M for third crypto fund.

• Senators grill SEC nominee Paul Atkins over FTX ties.

• Crypto.com says the SEC's investigation has been shut.

• Sei Foundation explores takeover of bankrupt 23andMe.

• Spot bitcoin ETFs report 10th straight day of net inflows.

• Hyperliquid delists JELLYJELLY after $12M whale attack.

• Dolomite expands onto BTC via ETH-connected ‘Spiderchain’.

• Tether plots expansion of USDT0 across Optimism’s superchain.

• HashKey and Bosera plan to launch tokenized money market ETFs.

• JPMorgan sees yield-bearing stablecoins growing from 6% to 50%.

• Crypto set for worst quarter for hacks in history with $1.6B in losses.

• GameStop joins the Bitcoin trend with a $1.3B Convertible Note offering.

• Dunamu (Upbit) triples shareholder dividends after 85% YoY profit growth.

• CoreWeave nets $1.5B in below-target IPO, stock to launch Friday on Nasdaq.

NOTEWORTHY READS

• Jason Zhao’s read on why IP needs to evolve.

• Happy’s read on why stablecoins will change the world.

• Bridget Harris’ read on rethinking ownership, stablecoins, and tokenization.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.