Hyperliquid's North Korean Connection Hands CME Ammunition for US Regulators

The Hyperliquid exchange has been making headlines in recent months due to its plans to enter the US market. However, new information has emerged that may put a damper on those plans.

In August, an analysis by Arkham found that wallets linked to North Korea's Lazarus Group had sold more than $30 million of Bitcoin through Hyperliquid over the prior three weeks. The proceeds were converted into ETH and SOL before being moved to Kraken, LBank, and KuCoin.

This development has given CME a powerful argument against the US entry of Hyperliquid. In May, CME and ICE warned Washington that Hyperliquid's pseudonymous markets could be used by sanctioned state actors to circumvent enforcement. Now, with concrete evidence of North Korean wallets using the exchange, CME can point to this as a clear example of the risks associated with allowing Hyperliquid into the US market.

ICE has taken a more conciliatory tone on the issue, meeting with CME and expressing interest in understanding the model. However, CME is actively litigating the CFTC's framework for regulating crypto perpetuals, arguing that they should be treated as swaps rather than futures.