Hyperliquid faces sanctions scrutiny as North Korea-linked wallets move crypto funds

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Hyperliquid sanctions scrutiny

Highlights

North Korea’s Lazarus Group-linked wallets sold over $30 million in bitcoin on Hyperliquid in the past three weeks, converting proceeds into ether and solana and transferring funds to Kraken, LBank, and KuCoin.
Hyperliquid's U.S. market ambitions face regulatory challenges as it must address derivatives, customer protections, and sanctions/AML compliance amid scrutiny over wallet-based, non-KYC trading.
Hyperliquid leads decentralized perpetual futures with over $5 trillion cumulative trading volume, $13.3 billion open interest, and $205 billion 30-day volume, but direct blockchain access poses significant KYC/AML and sanctions risks.

North Korea-linked trading activity on Hyperliquid

As reported by CoinDesk, blockchain data reviewed by Arkham shows wallets tied to North Korea’s Lazarus Group have sold more than $30 million in bitcoin on Hyperliquid over the past three weeks, then used the proceeds to buy ether and solana before transferring those assets to other exchanges including Kraken, LBank and KuCoin.

The wallets identified by Arkham as linked to Lazarus were first discovered by crypto investigator ZachXBT in 2024. CoinDesk says it has not established the identities of the account holders receiving funds at centralized exchanges or whether those platforms knew the origin of the assets.

Hyperliquid does not respond to requests for comment by publication time. The platform has previously faced similar concerns, including in December 2024 when MetaMask security researcher Taylor Monahan identified suspected North Korea-controlled wallets trading there since at least October that year; that disclosure contributed to about $250 million of net outflows in a single day, although Hyperliquid says at the time that the platform is not exploited and no user funds are lost.

U.S. market ambitions draw regulatory focus

Trump says earlier this month at a White House event that CFTC Chairman Mike Selig is working on a pathway to bring Hyperliquid into the U.S. in a fully compliant and legal fashion. That effort aligns with the administration’s broader push to make the U.S. a hub for crypto businesses that have historically operated offshore.

Any move into the U.S. market would require Hyperliquid to navigate rules covering derivatives exchanges, customer protections and market surveillance, while also addressing sanctions and anti-money-laundering risks tied to wallet-based trading without traditional know-your-customer checks. Kraken parent Payward is also in advanced talks with Hyperliquid Labs to bring perpetual futures to U.S. traders, Bloomberg reports Monday.

Hyperliquid has become the leading decentralized venue for perpetual futures, with more than $5 trillion in cumulative trading volume, about $13.3 billion in open interest and roughly $205 billion in volume over the past 30 days, according to DefiLlama. Its growth has drawn attention from Wall Street and regulators alike, while filings tied to investment products linked to its HYPE token explicitly warn that direct blockchain access can limit KYC, AML and sanctions screening, leaving the network exposed to use by sanctioned actors.

In our earlier article on the RBI’s penalty for a KYC compliance lapse at The Mumbai District Central Co-operative Bank, we explained that the bank was fined for failing to upload customer KYC records to the Central KYC Records Registry (CKYCR) within the required timeframe. We noted the action followed supervisory findings and was framed as a compliance deficiency rather than a judgment on customer transactions, underscoring how regulators are tightening scrutiny around verification and recordkeeping.

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