Absurdity of Hyperliquid: blockages due to HTX threaten to spread to Bybit
The decentralized exchange Hyperliquid has found itself at the center of a scandal, applying British sanctions against the crypto exchange HTX with unprecedented severity. The platform, registered in Singapore, has started blocking wallets that had only indirect interaction with HTX after May 26, 2026. Now, addresses linked to Bybit, the world's second-largest centralized exchange, could also be affected.
What is the essence of the complaints against Hyperliquid?
The trigger was the UK sanctions of May 26, 2026, against Huobi Global S.A., a company associated with HTX. Authorities suspect the exchange of helping Russia circumvent restrictions — specifically, transferring over $1.5 billion through the so-called A7 network. Under British rules, the restrictions apply to local Virtual Asset Service Providers (VASPs). However, Hyperliquid, not being a British company, has gone beyond the law.
As noted by a user under the pseudonym "as required," Hyperliquid blocks any wallet that has had any contact with HTX addresses after the specified date, regardless of the number of intermediate transfers. An example is given of an investor named Duldul Capital, who was blocked simply for lending funds to a friend whose wallet turned out to be linked to HTX. Moreover, the platform did not provide an opportunity to appeal the decision.
Why is the blocking considered excessive?
In a separate post, "as required" refuted the common misconception that "Hyperliquid's hands are tied" by analytics companies like Chainalysis, TRM Labs, or Elliptic. He contacted several compliance organizations, and all confirmed that they do not provide clients with lists for blocking, but only give factual labels, such as "wallet interacted with HTX." Which specific addresses to block is decided by Hyperliquid itself.
Interestingly, other platforms have found a mechanism for reviewing decisions. The marketplace OpenSea unblocked wallets within a few hours, while exchanges like Lighter, Extended, and several others did not block the same addresses at all. This proves that a transparent appeals process does not create legal risks for the platform.
This criticism is shared by well-known on-chain researchers. According to ZachXBT, the sanctions against HTX have effectively devalued risk assessment in the blockchain: compliance systems now label many ordinary wallets that have only once interacted with the exchange as "high-risk." Such a strict interpretation contradicts Hyperliquid's very idea of finance, which should expand people's opportunities, not deprive them of access without the right to defense.
Expert opinion: This situation exposes a fundamental problem with decentralized platforms: when they begin to blindly copy centralized regulatory mechanisms without transparent procedures, they lose their main advantage — user trust. If Hyperliquid does not reconsider its policy, it could trigger a massive capital outflow and undermine the reputation of the entire DeFi sector.