Is Hyperliquid's money laundering tool facing regulatory concerns? Cybersecurity team: James Wynn is also one of us.

The on-chain exchange Hyperliquid has recently become the focus of the market, not only due to the incredible pump of its native token HYPE, but also because of recent discussions sparked by security and money laundering controversies. Mirror Tang, founder of the Web3 security team Salus, revealed that Chinese law enforcement agencies have cracked down on three cases involving money laundering of crypto assets using the platform in recent months, raising regulatory concerns once again.

Since March of this year, Chinese law enforcement agencies have cracked 3 cases of Money Laundering using @HyperliquidX.

The operation technique utilizes Hyperliquid’s high leverage liquidation mechanism to hedge and clean up illegal gains: creating liquidation losses on HL while profiting from reverse positions on centralized exchanges, completing the money laundering.

The structure of this strategy is highly similar to the operational path of @JamesWynnReal.

Please @chameleon_jeff…

— Mirror Tang (@mirrorzk) June 6, 2025

Mirror Tang accuses Hyperliquid of being a hotspot for Money Laundering.

Salus founder Mirror Tang (@mirrorzk) revealed this morning that since March 2025, Chinese law enforcement agencies have cracked three cases of Money Laundering through Hyperliquid, with nearly identical operating methods:

Open high leverage positions on Hyperliquid, intentionally triggering liquidation to create the illusion of losses, while simultaneously making opposing positions to profit on the centralized exchange (CEX), ultimately achieving money laundering.

This kind of “dual platform hedging + pretending to incur losses” operation has raised the community’s high alert regarding Hyperliquid’s decentralized facade, which lacks KYC and risk control measures. Tang specifically pointed out co-founder Jeff Yan: “If such risks are not actively addressed, the platform may face strict regulation.”

( gives Hyperliquid ( HYPE ) a fatal blow: North Korean hackers target lurking crisis, no KYC centralized exchange ).

Is helping Hyperliquid advertising or money laundering? James Wynn’s high leverage trading suspicions.

He pointed out that this kind of operation is exactly the same as the well-known high-leverage trader James Wynn. Wynn became famous for making profits with a hundred times leverage on Hyperliquid, but in May 2025, he suffered a severe setback, and his account funds were once liquidated.

What is even more alarming is that the source of Wynn’s funds is suspected to be related to the defunct exchange FTX’s quantitative company Alameda Research, which has long been liquidated due to accusations of misappropriating user funds and fraud. If these funds subsequently flow into Hyperliquid, the platform may have already become a breeding ground for illegal money transfers.

(Who is Hyperliquid on-chain giant James Wynn? Is the $1.2 billion high-leverage gamble just for HYPE? )

ZachXBT tracks the source of Money Laundering: the mysterious giant whale is actually a repeat fraudster

On-chain detective ZachXBT also revealed earlier this year. He tracked down a “mystery trader” who made more than $20 million in leveraged operations on Hyperliquid and GMX with addresses linked to multiple gambling platforms, money laundering addresses, and phishing websites.

Finally, through a payment record and a British mobile phone number, he confirmed that the trader’s real identity was William Parker, a former convict who had been arrested several times in the United Kingdom and Finland for fraud and casino theft, known as Alistair Peckover. The fact that he has returned to his old business on the chain once again highlights the crisis caused by Hyperliquid’s censorship vulnerability and anonymity mechanism.

( ZachXBT: A mysterious Hyperliquid whale is suspected of being a fraudster with a criminal record, leveraging operations to profit 20 million dollars, revealing their whereabouts )

The Paradox of Decentralization and KYC: The Crossroads of Hyperliquid

The rapid rise of Hyperliquid is built on two core advantages: “no KYC required” and “high leverage with excellent liquidity.” However, these two advantages have now become the biggest risks for the platform:

It not only conceals the fact that its actual structure is similar to a centralized exchange, but also becomes the best tool for money laundering, arbitrage, and illegal fund operations.

The series of warnings from Mirror Tang and ZachXBT is gradually putting Hyperliquid in the spotlight. If the platform fails to enhance transparency and implement stronger cybersecurity and anti-money laundering measures, it may face regulatory issues similar to those of the mixing protocol Tornado Cash in the future.

Is this article about Hyperliquid becoming a Money Laundering tool facing regulatory concerns? Cybersecurity team: James Wynn is also one of the same kind. First appeared in on-chain news ABMedia.