Chinese law enforcement recently exposed multiple cryptocurrency money laundering cases using the decentralized trading platform Hyperliquid. Since March 2025, at least three such cases have been uncovered, with criminals cleverly utilizing the platform's high leverage and forced liquidation mechanisms to "whitewash" illegal funds by creating fake trading losses.
Money Laundering Method Analysis: Fund Transfer Under High Leverage
According to Mirror Tang, co-founder of Web3 security company Salus, the core money laundering operations involve deliberately triggering high-leverage position liquidation losses on theerl, simultaneously opposite positions on centrcentralized exchanges to achieve profits, thereby completing the illegal fund launlaunMirror Tang noted stated:
"Since March this year, Chinese law enforcement has uncovered 3 cases of cryptocurrency money laundering using Hyperliquid. The method involves using Hyperliquid's high-leverage liquidation mechanism to offset and cleanse illegal proceeds: creating liquidation losses on HL while establishing on centrprofit, completing fund laundering."
Tang specifically laopen high high-with illegal funds on Hyperliquid, deliberately operating to force position liquidation, seemingly causing massive investment. losses they have already simultaneously established opposite other centralized trading platforms. When Wheniqis liquid, the opposite position on centrcentralized platform profits, thereby reintroducing illegal funds into the financial system as seemingly legal trading trading profits.
Trading Strategy and Similarity with Known Traders
Notably, Mirror Tang observed that the money laundering strategy structure bears high similarity to some trading paths used by known cryptocurrency trader James Wynn, without directly accusing Wynn of money laundering activities, but highlighting significant methodological similarities, their such asynn being known for using 10 to 40 times leverage for short-term trading in the cryptocurrency market, focusing focusing on capturing short-term trading opportunities from market sentiment volatility.
Response regarding platform mechanism exploitation, appealederlfounders emphasizing highly prioritize and measures. HeUid resolve current risk management deficiencies, platform high risks.
< >>entral(DeFi) platform rapid development and popularization, how to effectively prevent financial crimes like money while launwhile encouraging technological innovation and market vitality has become a major challenge faced by global regulators and DeFi platforms themselves The. Hyperliquid related case exposure again cases highlights financial crime methods' continuous evolution, continuous evolution and need strengthen platform construction to address illegal increasingly illegal fund flow problems. want to: confirm the translation is correct, you me?
