Hyperliquid has been sued by two major traditional exchanges
Author: @giantcutie666
The two largest traditional exchanges in the world—CME (Chicago Mercantile Exchange) and ICE (Intercontinental Exchange, parent company of the New York Stock Exchange)—have teamed up to go to the U.S. Congress and CFTC to complain, demanding strict regulation of the crypto derivatives platform Hyperliquid.
Hyperliquid is a decentralized exchange (DEX) that, according to the version of the "Clarity Act" released by the Senate yesterday (
The Senate version of the Clarity Act is out, and it is very different from the House version! The devil is in the details...
), does not require user KYC.
It originally kept a distance from traditional exchanges, mainly dealing in cryptocurrency contracts.
However, last October, it launched a feature called HIP-3—allowing direct trading of contracts for traditional assets like oil and stocks on-chain.
At the end of February, the U.S. and Israel teamed up to take action against Iran, primarily doing so on weekends!
The problem arose—traditional futures markets are closed on weekends.
Thus, this immense wealth flowed to Hyperliquid...
Before the Iran conflict, Hyperliquid's oil contracts had an average daily trading volume of only a few million dollars.
After the conflict broke out, this number skyrocketed to an average of $700 million daily, peaking at $1.7 billion in a single day. From the end of February to mid-March, it accumulated over $10 billion.
CME and ICE each earn over $5 billion a year from their futures business, while Hyperliquid is expected to generate over $1 billion this year.
What's more concerning is that Hyperliquid's growth rate far exceeds theirs, specifically targeting the time slots they overlook—weekends and late nights.
So, these two companies teamed up to go to Washington. Their demands are very specific: they want Hyperliquid to register with the CFTC, perform KYC, and accept trading surveillance.
Hyperliquid originally attracted global users with anonymous trading; requiring it to perform KYC would directly collapse its product logic.
CFTC Chairman Michael Selig recently stated: Hyperliquid "may affect the prices on our registered platforms."
The Trump administration appeared friendly towards crypto, but this friendliness has its limits: protecting domestic crypto companies (Coinbase, Kraken) is acceptable, but allowing offshore DEXs to take jobs from U.S. regulated exchanges is not.
Hyperliquid is also fighting back; in February, it established the Hyperliquid Policy Center, hiring a bunch of lawyers and lobbyists to actively negotiate with the CFTC, seeking a differentiated regulatory framework.
However, the odds of success seem slim.
Hyperliquid, while branded as "decentralized," is actually quite fragile—having only 31 validators, and its capital bridge relies on a single 3-of-4 multisig wallet for custody.
If the CFTC really decides to take action, the enforcement path is very clear: given Hyperliquid's current level of decentralization, the CFTC can simply not recognize it as a DEX.
This is how BitMEX, Polymarket, and OOKI DAO were dealt with back in the day; the templates are already in place.
If this happens, Hyperliquid will either be forced to compromise, register, or completely exit the U.S. market.
The HIP-3 line of derivatives for oil and stocks will likely be integrated into the existing regulatory framework.
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