In a preview of an upcoming conversation with Galaxy Research’s Alex Thorn posted to X, former Binance CEO Changpeng “CZ” Zhao praised blockchain-based perpetual futures exchange Hyperliquid, which has been one of the biggest success stories in crypto over the past couple of years. However, CZ also hinted that Hyperliquid could face legal scrutiny for pairing minimal identity checks with decentralization theater.
“I would never do what they do given what I’ve experienced in my life,” said CZ. “But I’m not a legal person. I cannot give other people advice. I assume they have good lawyers. They are making a lot of money.”
CZ added that Binance can’t compete with Hyperliquid, pointing to the latter’s lack of compliance with Know Your Customer regulations. “They don’t have KYC,” said CZ. “They claim to be decentralized.”
CZ on Hyperliquid:
“I think the Hyperliquid invention is actually awesome. They occupy a niche that Binance.. cannot compete. They don’t have KYC. They claim they’re decentralized… I would never do what they do, given what I’ve experienced… I assume they have good lawyers.” pic.twitter.com/FOXuzaRodc
— Alex Thorn (@intangiblecoins) June 16, 2026
CZ is speaking from direct experience here. In November 2023, Binance pleaded guilty and agreed to pay more than $4.3 billion to resolve U.S. allegations tied to anti-money laundering and sanctions violations, while Zhao personally pleaded guilty to causing Binance to fail to maintain an effective anti-money laundering program. Zhao also later received a four-month prison sentence.
Zhao would later receive a controversial pardon from President Trump in October 2025. Former Justice Department pardon attorney Liz Oyer described Trump’s pardon of Zhao as “unprecedented” corruption because of the overlap between Binance’s and Trump-linked crypto venture World Liberty Financial’s business dealings. Of course, there have been many such controversies regarding Trump-affiliated crypto projects during the president’s second term in office, which could explain why most Americans do not trust him to fairly regulate the industry, according to one poll.
Notably, the privacy-focused bitcoin wallet developers of Samourai Wallet made their own pardon request not long after CZ was pardoned, while facing prosecution over software that prosecutors say facilitated illicit transactions. However, they did not have obvious business entanglements with Trumpworld’s crypto apparatus, and they did not get the same outcome. Both developers are currently serving multi-year prison sentences.
Binance is also far from the only crypto trading venue to face charges associated with lax KYC and AML standards. In January 2025, crypto exchange KuCoin pleaded guilty to operating an unlicensed money-transmitting business. As a result, it agreed to pay nearly $300 million in fines and exit the U.S. market for at least two years. Around the same time, BitMEX became one of the best-known examples of the same pattern, as the exchange was fined $100 million for willfully violating the Bank Secrecy Act by similarly operating without proper identity checks.
Solving Regulatory Troubles with Blockchain Magic
What makes the current moment stranger is that many of these legal issues start to look less urgent once the same trading activity is pushed onto a blockchain and wrapped in decentralization branding. Coinbase’s Base network is a useful example. As I previously covered in an op-ed on Base, Coinbase plays a central role in the layer-two Ethereum network’s operations and economics, including acting as the sole sequencer for transactions and collecting all associated fees. Coinbase also has a stake in and business relationship with Circle, the issuer of the USDC stablecoin, which is heavily used throughout the Base ecosystem.
Incredibly, despite what he claimed in the interview clip, CZ is himself an adviser to Aster and a holder of its crypto token. Aster is a platform similar to Hyperliquid that initially operated on BNB Chain, the Binance-affiliated crypto network that is, roughly speaking, Binance’s version of Coinbase’s Base. Historically, Binance conducted quarterly BNB burns under a formula tied to the exchange’s trading volume, which was key to the underlying BNB cryptocurrency’s value proposition. That process was later replaced by BNB Auto-Burn, removing the direct connection to Binance exchange activity. In March, Aster launched its own blockchain, Aster Chain, making its architecture more directly comparable to Hyperliquid’s vertically integrated exchange-and-blockchain model.
Isn't that what they did with Base?
— Kyle Torpey (@kyletorpey) December 9, 2024
While the technical stack used in these kinds of systems is different from a traditional exchange, they can reproduce some of the same concentrations of control and economic benefit found in traditional financial institutions. If lawmakers or regulators wanted stricter anti-money laundering compliance on major crypto rails, it is not hard to see where pressure could be applied. For example, in Base’s case, a company running the transaction sequencer, collecting fees, promoting the chain, and helping steer users toward a stablecoin issued by a close partner does not suddenly become unreachable just because the user experience is dressed up as decentralized finance. The point is not that Base, BNB Chain, Aster, and Hyperliquid are identical systems. It is that the line between centralized control and decentralized presentation is often much blurrier than crypto marketing lets on.
Hyperliquid’s own system uses USDC as collateral for its perpetual futures markets. So, while Hyperliquid may look structurally different from Binance on paper, the notion that these venues exist fully beyond the reach of state power has no basis in reality. There are ways to build out these systems in a much more decentralized fashion, but those options tend to create issues when it comes to the quality of the overall user experience.
For now, though, this kind of regulatory arbitrage appears likely to continue. The newly established Hyperliquid Policy Center, which describes itself as an independent organization but was funded via $28 million worth of HYPE tokens by the Hyper Foundation, is advocating for a regulated U.S. path to on-chain derivatives markets. Meanwhile, Duke Law lecturing fellow Lee Reiners has also argued that pending crypto legislation could give Trump-linked projects room to maneuver as well, claiming the proposed Clarity Act framework could help support the classification of World Liberty Financial’s WLFI token as something other than a security, creating legal cover under a new crypto law. However, ethics-related concerns from Democrats appear to be causing issues with the legislation’s progress in the Senate.
English (US) ·