Mass wallet blocking on Hyperliquid: why HTX users were affected, and Bybit could be next
A scandal is brewing on the Hyperliquid platform that could have far-reaching consequences for the entire DeFi ecosystem. I have carefully examined the situation and must admit: the team's actions appear to be an overly harsh and, in my opinion, legally questionable interpretation of the sanctions regime.
What is the essence of the conflict?
It all started when the UK government imposed sanctions on May 26, 2026, against Huobi Global S.A., a company linked to the HTX exchange. The basis is suspicions of aiding Russia in circumventing sanctions, specifically by transferring over $1.5 billion through the so-called A7 network. Under British rules, these restrictions automatically apply to local virtual asset service providers (VASPs).
However, Hyperliquid, which is registered in Singapore and is not a British company, went further. The platform began blocking any wallet that had even indirect contact with HTX addresses after the specified date, regardless of the number of intermediate transfers. This has sparked a wave of criticism, and it must be said, quite justified.
The most striking example is the investor Duldul Capital, who was blocked simply because he lent funds to a friend whose wallet turned out to be linked to HTX. This is no longer a fight against violators, but a "witch hunt" based on the principle of "guilty by association."
Why is this absurd and what are the risks?
Critics rightly note that Hyperliquid is not a British company and is not obligated to blindly copy their sanctions policy. Moreover, as it turns out, analytical companies (compliance organizations) only provide factual labels like "wallet interacted with HTX," while the platform itself makes the decision to block.
In a sarcastic tone, it was suggested to take Hyperliquid's logic to the point of absurdity: if millions of wallets are "insignificant," then everyone who deposited or withdrew funds through Bybit, the world's second-largest exchange, after June 17 should be blocked. Let me remind you that the Singapore regulator MAS has already added Bybit Fintech Limited to its investor alert list. Thus, if Hyperliquid decides to continue following its own logic, millions of users could be affected.
Well-known on-chain researcher ZachXBT noted that the sanctions against HTX have effectively devalued risk assessment in the blockchain: compliance systems now label many ordinary wallets as "high-risk" simply for having once come into contact with the exchange.
My opinion: Such a strict interpretation contradicts the very idea of decentralized finance, which should expand people's opportunities, not deprive them of access without the right to defense. If Hyperliquid continues in the same vein, it will set a dangerous precedent and undermine trust in the entire industry. The market needs clear and transparent appeal mechanisms, not "sanctions terror" at its own discretion.