CZ calls Hyperliquid ‘awesome’ but warns it will need lawyers

On the Galaxy Brains podcast this week, Binance founder Changpeng Zhao called Hyperliquid “awesome” and noted the platform claims to be decentralized and does not run Know Your Customer checks. He added that he would not operate such a model given his personal legal experience and said he assumes the team has strong legal counsel.

Hyperliquid’s native token HYPE reached a record $76.70 on June 16, rising more than 10% that day. Spot HYPE exchange-traded products attracted about $172 million in inflows in their first month. Analyst price targets range from roughly $83 to $98, with some longer-term forecasts as high as $300.

The protocol offers synthetic perpetual futures that let traders take positions on asset prices without owning the underlying shares. On the SpaceX IPO day Hyperliquid reported $1.4 billion in SPCX volume while not holding any real SpaceX shares. Several major exchanges canceled their tokenized SpaceX products after failing to source enough actual stock; Binance was among them.

Zhao entered a November 2023 plea agreement with the U.S. Department of Justice, pleading guilty to anti-money laundering violations. The agreement acknowledged that Binance processed transactions for users in sanctioned jurisdictions and failed to maintain adequate KYC controls. He served four months in a U.S. federal prison and has described the experience as influencing his approach to compliance.

Regulators and financial crime frameworks generally require platforms that offer custodial services or fiat on-ramps to verify user identities under KYC rules. Hyperliquid says it operates as a decentralized protocol and does not perform identity checks. That model allows faster product rollout but raises questions about whether the platform falls within the scope of regulated financial services.

Binance has not listed HYPE, and Zhao has supported a rival decentralized exchange. His public remarks and actions have previously affected crypto markets: a November 2022 announcement that Binance would sell its FTT holdings is cited as a catalyst for the liquidity crisis that preceded FTX’s collapse, and FTX later filed legal claims alleging the sale was a “malicious” act.

On the podcast Zhao summarized his view: “I think the Hyperliquid invention is actually awesome… I would never do what they do, given what I’ve experienced… I assume they have good lawyers.”