The hydrostatic valve did its job but it sounds like the pool builder did not put the slotted pipe at the bottom of the valve. The valve is poping up like it is suppose to do but gravel is floating up and sticking in the valve leaving it open. When you see the water level dropping dive down and remove the main drain cover and check the hydrostatic valve, if there is gravel stuck in it, pick it out and the valve will reset itself (turn the pump off first).