Chinese law enforcement has initiated investigations into three cases of money laundering associated with the Hyperliquid platform. Experts point to the use of high leverage in risky positions.
Methods of Money Laundering
According to Mirror Tang, founder of the Web3 security company Salus, Hyperliquid is ideal for creating paper losses that are offset by counter-trading in centralized markets.
Risks and Consequences
Chinese authorities uncovered potential money laundering during a period of significant growth in Hyperliquid's trading volumes, reaching 50% of Binance's derivatives market. The identified methods echo those used by trader James Tang.
Hyperliquid's Capabilities and Their Impact
Hyperliquid allows for substantial losses and gains through 40x leverage. Despite high risks, the platform continues to attract attention from major market players and operates without KYC requirements.
The investigation by Chinese authorities highlights the need for oversight of high-risk trading platforms. Hyperliquid remains beyond regulatory scrutiny, posing additional challenges.
