Hyperliquid blocks HTX-linked wallets as UK sanctions trigger backlash

Hyperliquid's aggressive wallet-blocking policy has frozen users with only indirect ties to sanctioned exchange HTX, sparking accusations of over-compliance and raising concerns about Bybit-linked addresses.

The UK sanctioned Huobi Global SA, the entity behind crypto exchange HTX, on May 26, 2026, on suspicion of funneling more than $1.5 billion to Russia through the so-called A7 network. Hyperliquid, a Singapore-registered decentralized exchange, responded by blocking any wallet that had interacted — even indirectly — with addresses previously associated with HTX, according to users and on-chain researchers.

"Hyperliquid is not a British company and has no ties to the UK. Nevertheless, it began blocking any wallet that had contact with addresses previously associated with HTX after May 26, regardless of the number of intermediate transfers," a user known as "as required" wrote on social media, citing the case of a Duldul Capital investor who was blocked after lending funds to a friend whose wallet was linked to HTX. The user said he spoke with several compliance firms including Chainalysis, TRM Labs and Elliptic, all of which confirmed they do not provide mandatory block lists — only factual labels — leaving the final decision to Hyperliquid itself.

The platform, which implements strict geo-blocking to exclude US users and offers zero-KYC derivatives trading to the rest of the world, has not provided a clear appeals process for affected wallets, according to multiple user reports. On-chain investigator ZachXBT said the sanctions against HTX have effectively weakened the usefulness of blockchain risk assessment, as compliance systems now label many ordinary wallets as "high risk" simply for having once interacted with the exchange. Other platforms took a more measured approach: OpenSea unblocked the same wallets within hours, while Lighter and Extended did not block them at all, the user said.

Why the backlash matters

The controversy extends beyond HTX. Singapore's central bank added Bybit Fintech Limited to its Investor Alert List on June 17, raising concerns that Hyperliquid's compliance framework could expand to block wallets with Bybit exposure. If the platform applies the same standard — blocking any wallet with any indirect link to a flagged entity — the number of affected users could grow substantially, given Bybit's position as one of the world's largest crypto exchanges by volume.

The episode highlights a growing tension in crypto compliance: how far should a platform go to satisfy sanctions regimes when the underlying blockchain is transparent and transactions are permanently visible? Hyperliquid's approach — blocking wallets based on indirect, multi-hop interactions — goes beyond what UK law requires of non-British entities, critics argue, and contradicts the platform's stated vision of decentralized, permissionless finance.

This article is for informational purposes only and does not constitute investment advice.