Hyperliquid is going overboard with wallet locks: HTX is just the beginning, Bybit is under threat
The decentralized exchange Hyperliquid has found itself at the center of a scandal due to disproportionately harsh sanctions. The platform, registered in Singapore, has begun blocking wallets that are only indirectly connected to the HTX exchange, and according to my data, Bybit could be the next target. What is happening is an alarming signal for the entire DeFi ecosystem.
The trigger was the British sanctions of May 26, 2026, against Huobi Global S.A. (linked to HTX). Authorities suspect HTX of aiding Russia in circumventing sanctions, specifically in transferring over $1.5 billion through the so-called A7 network. Under British law, the restrictions apply to local virtual asset service providers (VASPs).
Law or Arbitrariness?
A user under the alias "as required" conducted their own investigation and found that Hyperliquid has gone far beyond the requirements of the law. The platform has begun blocking any wallets that have ever (after May 26) interacted with addresses that have been in contact with HTX. The number of intermediate transactions is irrelevant.
As "as required" notes, the sanctions only apply to British companies dealing with HTX. Hyperliquid, however, not being a British company, applies sanctions to users worldwide, blocking them without the right to appeal. An example is given of the investor Duldul Capital, who was blocked simply for lending funds to a friend whose wallet turned out to be connected to HTX.
Absurd Logic and Comparison with Bybit
"As required" sarcastically takes Hyperliquid's logic to an absurd conclusion: if millions of wallets are supposedly "insignificant," then it would be worth blocking everyone who deposited or withdrew funds through Bybit—the second-largest exchange in the world—after June 17. It is worth recalling that the Singapore regulator MAS has already added Bybit Fintech Limited to its investor alert list.
This is not just a hypothetical threat. I see that Hyperliquid's logic, applied to HTX, could easily be extended to Bybit, leading to massive blockages and a paralysis of trading for millions of users.
Why This Is Considered Excessive
In a separate post, "as required" refutes the common misconception that Hyperliquid's hands are tied by analytics companies like Chainalysis. They spoke with several compliance organizations, and all confirmed that they only provide factual labels (e.g., "wallet interacted with HTX"), while the decision to block is made by Hyperliquid itself.
This criticism is shared by well-known on-chain researchers. ZachXBT noted that the sanctions against HTX have effectively devalued risk assessment on the blockchain: compliance systems now label as "high-risk" many ordinary wallets that have only once come into contact with the exchange.
Importantly, other platforms have found a more balanced approach. For example, the marketplace OpenSea unblocked "as required's" wallets within a few hours, and exchanges like Lighter, Extended, and several others did not block them at all. This proves that a transparent appeals process does not create legal risks for the platform, unlike mindless mass blockages.
My opinion: Hyperliquid, positioning itself as a flagship of decentralized finance, is setting a dangerous precedent. Such a rigid interpretation contradicts the very idea of finance, which should empower people, not deprive them of access without the right to defense. If the community does not react, we risk seeing "decentralized" platforms turn into the most zealous censors.