Decentralized cryptocurrency exchanges (DEXs) continue to challenge the dominance of centralized platforms, even as a recent $6.2 million exploit on Hyperliquid highlights risks in DEX infrastructure.

A cryptocurrency whale made at least $6.26 million profit on the Jelly my Jelly (JELLY) memecoin by exploiting the liquidation parameters on Hyperliquid, Cointelegraph reported on March 27. 

The exploit was the second major incident on the platform in March, noted CoinGecko co-founder Bobby Ong.

“$JELLYJELLY was the more notable attack where we saw Binance and OKX listing perps, drawing accusations of coordinating an attack against Hyperliquid,” Ong said in an April 3 X post, adding:

“It’s clear that CEXes are feeling threatened by DEXes, and are not going to see their market share erode without putting on a fight.”

DEX growth reshapes derivatives market

Hyperliquid is the eighth-largest perpetual futures exchange by volume across both centralized and decentralized exchanges. This puts it “ahead of some notable OGs such as HTX, Kraken and BitMEX,” Ong noted, citing an April 4 research report.

Related: Bitcoin to $110K next, Hyperliquid whale bags $6.2M ‘short’ exploit: Finance Redefined

Hyperliquid’s growing trading volume is starting to cut into the market share of other centralized exchanges.

Top derivative exchanges by open interest. Source: CoinGecko 

Hyperliquid is the 12th-largest derivatives exchange, with an over $3 billion 24-hour open interest — though it still trails Binance’s $19.5 billion by a wide margin, CoinGecko data shows.

According to Bitget Research analyst Ryan Lee, the incident may harm user confidence in emerging decentralized platforms, especially if actions taken post-exploit appear overly centralized.

“Hyperliquid’s intervention — criticized as centralized despite its decentralized ethos — may make investors wary of similar platforms,” Lee said.

Whale exploits Hyperliquid’s trading logic

The unknown Hyperliquid whale managed to exploit Hyperliquid’s liquidation parameters by deploying millions of dollars worth of trading positions.

The whale opened two long positions of $2.15 million and $1.9 million, and a $4.1 million short position that effectively offset the longs, according to a postmortem by blockchain analytics firm Arkham.

Hyperliquid exploiter, transactions. Source: Arkham

When the price of JELLY rose by 400%, the $4 million short position wasn’t immediately liquidated due to its size. Instead, it was absorbed into the Hyperliquidity Provider Vault (HLP), which is designed to liquidate large positions.

Related: Polymarket faces scrutiny over $7M Ukraine mineral deal bet

As of March 27, the unknown whale still held 10% of the memecoin’s total supply, worth nearly $2 million, despite Hyperliquid freezing and delisting the memecoin, citing “evidence of suspicious market activity” involving trading instruments.

The Hyperliquid exploit occurred two weeks after a Wolf of Wall Street-inspired memecoin — launched by the Official Melania Meme (MELANIA) and Libra (LIBRA) token co-creator Hayden Davis — crashed over 99% after launching with an 80% insider supply.

Magazine: Memecoins are ded — But Solana ‘100x better’ despite revenue plunge

Nearly 400,000 creditors of the bankrupt cryptocurrency exchange FTX risk missing out on $2.5 billion in repayments after failing to begin the mandatory Know Your Customer (KYC) verification process.

Roughly 392,000 FTX creditors have failed to complete or at least take the first steps of the mandatory Know Your Customer verification, according to an April 2 court filing in the US Bankruptcy Court for the District of Delaware.

FTX users originally had until March 3 to begin the verification process to collect their claims.

“If a holder of a claim listed on Schedule 1 attached thereto did not commence the KYC submission process with respect to such claim on or prior to March 3, 2025, at 4:00 pm (ET) (the “KYC Commencing Deadline”), 2 such claim shall be disallowed and expunged in its entirety,” the filing states.

FTX court filing. Source: Bloomberglaw.com

The KYC deadline has been extended to June 1, 2025, giving users another chance to verify their identity and claim eligibility. Those who fail to meet the new deadline may have their claims permanently disqualified.

According to the court documents, claims under $50,000 could account for roughly $655 million in disallowed repayments, while claims over $50,000 could amount to $1.9 billion — bringing the total at-risk funds to more than $2.5 billion.

FTX court filing, estimated claims. Source: Sunil

The next round of FTX creditor repayments is set for May 30, 2025, with over $11 billion expected to be repaid to creditors with claims of over $50,000.

Under FTX’s recovery plan, 98% of creditors are expected to receive at least 118% of their original claim value in cash.

Related: FTX liquidated $1.5B in 3AC assets 2 weeks before hedge fund’s collapse

How FTX users can complete KYC

Many FTX users have reported problems with the KYC process.

However, users who were unable to submit their KYC documentation can resubmit their application and restart the verification process, according to an April 5 X post from Sunil, FTX creditor and Customer Ad-Hoc Committee member.

FTX KYC portal. Source: Sunil

Impacted users should email FTX support (support@ftx.com) to receive a ticket number, then log in to the support portal, create an account, and re-upload the necessary KYC documents.

Related: Crypto trader turns $2K PEPE into $43M, sells for $10M profit

FTX’s Bahamian subsidiary, FTX Digital Markets, processed the first round of repayments in February, distributing $1.2 billion to creditors.

The crypto industry is still recovering from the collapse of FTX and more than 130 subsidiaries launched a series of insolvencies that led to the industry’s longest-ever crypto winter, which saw Bitcoin’s (BTC) price bottom out at around $16,000.

While not a “market-moving catalyst” in itself, the beginning of the FTX repayments is a positive sign for the maturation of the crypto industry, which may see a “significant portion” reinvested into cryptocurrencies, Alvin Kan, chief operating officer at Bitget Wallet, told Cointelegraph.

Magazine: XRP win leaves Ripple a ‘bad actor’ with no crypto legal precedent set

Key takeaways

Grok 3 adjusts its predictions based on evolving market trends by analyzing real-time data patterns.

Combining technical analysis with sentiment data improves accuracy; Grok 3 effectively identifies potential trade opportunities.

Backtesting strategies before live trading is crucial; testing Grok 3’s prompts using historical data helps refine conditions and improve performance.

While Grok 3 can automate trades, human oversight remains critical in adapting to unexpected market conditions.

Crypto trading is complex. Prices can swing wildly, and even experienced traders struggle to keep up. That’s why automation tools are gaining attention, with many now exploring Grok 3, an advanced artificial intelligence (AI) model from xAI (founded by Elon Musk).

Grok 3 wasn’t built specifically for trading, but its ability to analyze data, spot patterns and interpret trends has encouraged traders to test it for automated strategies. The idea is simple: Let Grok 3 make data-driven decisions, removing the emotional guesswork that often leads to poor trades.

But does it actually work? Some traders report impressive results, while others find it unpredictable, especially in volatile markets.

This article digs into what happens when you automate crypto trades with Grok 3. From successful strategies to unexpected risks, you’ll get a clear picture of what to expect, plus actionable tips to improve your results.

What is Grok 3 and how does it relate to crypto trading?

Grok 3 is an AI model designed by xAI, an artificial intelligence company founded by Elon Musk. While its primary focus is natural language processing, some traders are now testing Grok 3 as a potential tool for improving crypto trading strategies. Unlike traditional trading bots operating on rigid rules, Grok 3’s flexible design allows it to analyze diverse data sources and uncover patterns that might be overlooked.

Why some traders are turning to Grok 3

Grok 3’s appeal lies in its ability to handle complex data, a crucial advantage in crypto markets, where price moves are often triggered by unexpected events or sentiment shifts.

Here’s where traders say Grok 3 has potential:

Identifying market sentiment trends: Crypto markets are heavily influenced by emotions like FOMO (fear of missing out) and FUD (fear, uncertainty, doubt). Grok 3 can analyze social media, news headlines and community discussions to assess changing sentiment, a key factor in crypto volatility.

Recognizing hidden patterns: Grok 3’s machine learning capabilities allow it to detect subtle correlations between indicators that traditional bots may overlook. For instance, Grok 3 may link an increase in social sentiment with rising whale activity to predict bullish momentum.

Flexible analysis based on prompts: Rather than following static rules like “Buy when RSI falls below 30,” Grok 3 enables traders to design more complex strategies using natural language instructions.

What happens when Grok 3 is used to automate crypto trades?

Grok 3 isn’t your typical crypto trading bot. It doesn’t place trades directly or integrate with exchanges on its own. But it can help traders build smarter, faster and more flexible automation systems. From writing trade logic to analyzing market sentiment, Grok 3 is already being used in the real world to streamline how crypto strategies are created and tested.

Instead of manually scripting every piece of logic, traders are now using Grok 3 to generate working code for bots. For example, a user asked Grok 3 to write token buy/sell logic with parameters like slippage, take-profit and gas priority fees. It generated a script that can be plugged into DeFi tools or expanded with 0x and Uniswap APIs.

Some traders use Grok 3 to build end-to-end bots tailored to niche tokens or specific strategies. In another example, Grok 3 was used to create an automated system that scans price action and triggers trades under strict conditions. It doesn’t just stop at buy/sell logic. Grok also writes portfolio rebalancing scripts and can simulate how positions would perform under different volatility conditions.

Here is an example of a prompt fed into Grok 3, along with the output received.

Grok 3’s response: High-frequency trading bot framework for Solana (SOL)

Below is a structured outline for a high-frequency trading bot framework designed for Solana (SOL), focusing on one-minute price fluctuations, risk management and trade execution. This outline provides a modular structure with placeholders for key components, avoiding specific implementation details as requested.

1. Core configuration

Purpose: Define global settings and constants for the bot.

Components:

Solana network endpoint (e.g., mainnet RPC URL)

Wallet configuration (private key or keypair for trading)

Trading pair (e.g., SOL/USDC)

Timeframe (one-minute candlestick data)

Trade size ($100 per position)

Max trades (10 concurrent or sequential positions)

Profit target ($50 total)

Max loss per trade ($20)

2. Data acquisition module

Purpose: Fetch and process real-time SOL price data.

Components:

WebSocket connection to Solana blockchain or exchange API (e.g., Serum, Raydium, or centralized exchange like Binance)

1-minute OHLCV (Open, High, Low, Close, Volume) data stream

Data buffer for storing recent price history

Error handling for connection drops or latency

3. Volatility analysis module

Purpose: Assess SOL’s price volatility to inform trade decisions.

Components:

Placeholder: Calculate short-term volatility (e.g., standard deviation or ATR over one-minute candles)

Placeholder: Define volatility thresholds (e.g., high/low volatility states)

Output: Volatility score or signal to adjust trade frequency/size

4. Trade signal generator

Purpose: Generate buy/sell signals based on price fluctuations.

Components:

Placeholder: Simple momentum strategy (e.g., price crossing a short-term moving average)

Placeholder: Filter signals using volatility analysis

Signal validation (e.g., avoid over-trading within one-minute window)

Output: Buy/sell signal with timestamp

5. Risk management module

Purpose: Enforce risk controls and position limits.

Components:

Position size calculator (fixed at $100 per trade)

Max loss check ($20 per trade stop-loss)

Total profit/loss tracker (halt at $50 profit or after 10 trades)

Concurrent trade limiter (cap at 10 active positions)

Emergency stop (pause bot on extreme volatility or connectivity loss)

6. Trade execution module

Purpose: Execute trades on the Solana blockchain or exchange.

Components:

Placeholder: Build Solana transaction (e.g., swap SOL for USDC via a DEX like Raydium)

Order type (market order for speed in one-minute timeframe)

Slippage tolerance (e.g., 0.5% max slippage)

Transaction signing and submission

Confirmation listener (await transaction finality)

Error handling (e.g., retry on failed execution)

7. Performance monitoring module

Purpose: Track and log bot performance in real time.

Components:

Trade log (entry price, exit price, profit/loss, timestamp)

Running total profit/loss calculator

Performance metrics (e.g., win rate, average trade duration)

Alert system (notify on profit target, max loss, or errors)

8. Main control loop

Purpose: Orchestrate bot operations in a continuous cycle.

Components:

Initialize bot (load config, connect to data feed)

Loop:

Fetch one-minute price data

Analyze volatility

Generate trade signal

Apply risk management checks

Execute trade if conditions met

Update performance metrics

Exit conditions (profit target hit, max trades reached, or manual stop)

9. Shutdown and cleanup

Purpose: Safely terminate the bot and finalize operations.

Components:

Close open WebSocket connections

Finalize pending transactions

Save trade log and performance summary

Release resources (e.g., memory, wallet connections)

Notes

This framework assumes integration with Solana’s ecosystem (e.g., using a DEX or liquidity pool). Adjust the execution module if targeting a centralized exchange.

Volatility analysis and signal generation are left as placeholders for customization (e.g., technical indicators or machine learning models).

Risk management is strict to align with the $50 profit goal and $20 max loss per trade, ensuring the bot operates within defined boundaries.

Caution! The above is a tailored outline shaped by the user’s prompt, targeting one-minute price fluctuations, risk management and trade execution. Its output varies with prompt detail, as specificity sharpens results. Moreover, placeholders like volatility analysis await user customization, reflecting Grok 3’s adaptive learning. It’s a conceptual guide, not code, and success hinges on implementation and market conditions. For deeper refinement, such as Solana-specific tweaks, users can provide more context. Grok 3 adjusts using their input and its latest insights.

Let’s learn the general steps required to set up Grok 3 for automated crypto trading.

How to set up Grok 3 for automated crypto trading

Setting up Grok 3 for AI-powered crypto trading automation isn’t as straightforward as installing a typical trading bot. Since Grok 3 wasn’t built for direct trading, it requires thoughtful setup, integration and customization. Below is a practical guide to setting up Grok 3 effectively for automated crypto trading with AI (artificial intelligence).

Step 1: Choosing a compatible trading platform

Since Grok 3 doesn’t connect directly to crypto exchanges, it requires integration with third-party platforms that support API automation. Platforms like:

3Commas: Ideal for executing trades via automated strategies.

TradingView: Used for generating trade signals using Pine Script.

CryptoHopper: Offers custom strategy-building tools with API integration.

Ensure that the chosen platform offers robust API support for managing trade execution, setting risk controls and tracking performance.

Step 2: Integrating Grok 3 with the trading platform

Grok 3 doesn’t connect directly to crypto exchanges; integration requires creative workarounds:

API integration via automation tools: Platforms like Zapier or Make.com can connect Grok 3’s analysis to trading platforms.

Custom Python scripts: For tech-savvy traders, Grok 3’s insights can be processed through Python scripts that execute trades based on Grok 3’s recommendations.

No-code automation tools: Services like IFTTT can trigger basic trading actions based on Grok 3’s sentiment analysis.

Step 3: Defining trading strategies with Grok 3

Grok 3’s success hinges on well-defined strategies. Unlike traditional bots that rely solely on technical signals, Grok 3 crypto trading bot can combine multiple factors, including:

Technical indicators: RSI, MACD, Bollinger Bands, etc.

Sentiment analysis: Social media trends, influencer opinions and news headlines

Onchain data: Whale activity, exchange inflows/outflows and large wallet movement.

Step 4: Backtesting strategies before live trading

Before deploying Grok 3’s strategy in live markets, backtesting is essential to evaluate its performance. Backtesting can reveal:

Accuracy of trade signals: Identify how often Grok 3’s suggested trades align with profitable outcomes.

False signal detection: Ensure Grok 3 isn’t generating excessive buy/sell recommendations in volatile or stagnant markets

Refinement opportunities: Fine-tune conditions such as RSI thresholds, sentiment scores or trade exit conditions

Examples of tools for backtesting include TradingView and CryptoQuant.

Step 5: Implementing risk management controls

Even with solid insights, crypto markets are unpredictable. Adding risk controls minimizes potential losses:

Stop-loss orders: Automatically exits trades if prices move beyond a set threshold.

Position limits: Restricts trade size to reduce exposure in uncertain markets.

Trailing stops: Locks in profits during upward trends while minimizing downside risk.

Example of risk control prompt:
“Write a code to handle buying and selling a token with the given parameters, including priority fees, slippage, and a take-profit mechanism.”

Please note that the output shown above is not complete and is provided for illustration purposes only.

Step 6: Ongoing monitoring and strategy refinement

Grok 3’s strength lies in its adaptability, but it requires ongoing monitoring to ensure optimal results. Regularly review:

Performance data: Assess win rates, profit margins and signal accuracy.

Market conditions: Adjust strategy if major shifts (e.g., regulatory changes or macroeconomic factors) impact sentiment or momentum.

Pro tip: Revisiting Grok 3’s prompts regularly can refine strategy outcomes and improve long-term performance.

Limitations of Grok 3

Despite its strengths, Grok 3 has limitations that traders must consider. 

Data loss: Crypto trading thrives on accurate and real-time data. However, crypto trading automation with Grok 3 has been reported to lose chunks of data, miscount words and provide incorrect time references, which can be detrimental in a fast-moving market and result in inaccurate signal detection, delayed responses to market events and flawed strategy execution.

No direct exchange integration: Unlike purpose-built trading bots, Grok 3 doesn’t connect directly to crypto exchanges. Traders must rely on third-party platforms to execute trades.

Forgetfulness: One of the biggest frustrations highlighted by some users is Grok 3’s “retrograde amnesia,” when it forgets everything from previous sessions. For crypto traders, this is a nightmare. Imagine building a trading strategy and needing Grok 3 to remember past trends and conversations, only for it to start fresh each session.

Bias: Grok 3 may deliver biased responses, potentially relying on incomplete or skewed sources. For traders who depend on unbiased sentiment analysis to gauge market mood, this shift could lead to misleading insights and poor decision-making.

Slower execution speed: Since Grok 3 processes information based on detailed prompts, its trade signals may lag behind fast-moving price changes.

Prompt dependence: Grok 3’s accuracy depends heavily on well-structured prompts. Vague or incomplete instructions often produce unreliable results.

While Grok-3 and other AI systems offer powerful tools for automating crypto trades, caution is essential. Their performance depends heavily on the quality of data and the strategies they’re programmed with, meaning unexpected market shifts or flawed inputs can lead to significant losses. 

Remember, AI lacks human intuition and may struggle with unprecedented events, so relying solely on it without oversight is risky. Always test strategies with small amounts first and get help from experts before making large investments.