Absurd Purge on Hyperliquid: Blockades Based on HTX Tips and Threat to Bybit
The crypto community has been shaken by a wave of criticism directed at the derivatives platform Hyperliquid. The reason is an overly aggressive and, according to many, unreasonable wallet blocking policy based on British sanctions against the HTX exchange. The situation has become so heated that analysts predict Bybit, the world's second-largest crypto exchange, could be the next target.
The trigger for the sanctions was the UK's restrictions from May 26, 2026, against Huobi Global S.A., associated with HTX. Authorities suspect the exchange of aiding Russia in evading sanctions, specifically in transferring over $1.5 billion through the so-called A7 network. According to British rules, the restrictions apply to local virtual asset service providers (VASPs).
The problem is that Hyperliquid, being a Singaporean company with no direct ties to the UK, has essentially gone beyond the law. The platform began blocking any wallets that had any interaction with addresses that contacted HTX after May 26, regardless of the number of intermediate transfers. A critic under the pseudonym as required cited a glaring example: investor Duldul Capital was blocked simply because he lent funds to a friend whose wallet turned out to be linked to HTX.
Where is the logic and the right to protection?
The key point: the sanctions only apply to British companies dealing with HTX. Hyperliquid, however, is essentially extrapolating them to everyone. Moreover, as as required notes, the platform has not provided an appeals mechanism. As a contrast, he cited OpenSea, which unblocked his wallets within hours, and exchanges Lighter and Extended, which did not block the same addresses at all. This proves that a transparent appeals process does not create legal risks for the platform.
Renowned on-chain researcher ZachXBT also expressed concern: according to him, the sanctions against HTX have effectively devalued risk assessment in the blockchain. Compliance systems now flag many ordinary wallets as "high-risk" simply for having once interacted with the exchange.
To top it off, as required ironically suggested taking Hyperliquid's logic to the absurd: if millions of wallets are supposedly "insignificant," then it would be worth blocking everyone who deposited or withdrew funds through Bybit after June 17. As a reminder, Singaporean regulator MAS recently added Bybit Fintech Limited to its investor alert list. Thus, if Hyperliquid continues its "sanctions bacchanalia," millions of users of the world's second-largest exchange could be at risk.
My professional opinion: This situation is a wake-up call for the entire DeFi industry. Hyperliquid is setting a dangerous precedent where a decentralized platform voluntarily takes on the role of an ultra-strict regulator without any jurisdictional basis or transparent procedures. This undermines the very idea of financial freedom and could seriously damage trust in the sector if other protocols follow suit.