Popular investor Kyle Samani, chairman of Forward Industries, has accused the decentralized exchange Hyperliquid of misleading users regarding its permissionless status. The allegations follow a formal update from the Monetary Authority of Singapore (MAS), which added the trading platform to its Investor Alert List (IAL) on June 26, 2026.
The IAL identifies entities that residents might mistakenly believe are licensed or authorized by the Monetary Authority of Singapore (MAS). While the listing does not carry enforcement weight or an outright ban, it warns local users that they will not receive regulatory protections if the platform encounters issues.
Kyle Samani challenges Hyperliquid permissionless claims
Hyperliquid responded by clarifying that it has never claimed MAS licensing and that all transactions remain transparent and self-custodial on-chain.
This regulatory friction comes at a time when offshore exchanges face increased scrutiny in the region. Earlier in June 2026, Bybit received a similar warning as the MAS tightened its oversight of unlicensed platforms. The regulator has recently ordered several offshore entities to either seek official approval or stop offering local services to Singaporean residents.
The core of the dispute rests on whether Hyperliquid is truly decentralized. Kyle Samani publicly urged the platform to “stop gaslighting the public,” arguing that genuine permissionlessness requires two fundamental conditions: open-source code and globally distributed validators. He noted that Hyperliquid currently fails to meet these criteria, citing its closed-source infrastructure as evidence of centralization.
Hyperliquid currently distributes its node repository as a signed binary rather than providing full source code. The development team, co-founded by Jeff Yan, has stated that open-sourcing will take place once its HyperCore engine reaches feature completion. However, Samani argues that without open-source transparency, the “permissionless” label is inaccurate.
Key details
As the Ethereum recovery outlook remains a focus for DeFi traders, the standards for what constitutes a decentralized network are under higher forensic pressure.
Validator concentration and governance concerns
Beyond code transparency, Kyle Samani raised concerns about the Hyperliquid Foundation’s power over network participants. He claimed the foundation can “jail” validators for any reason and remove them from the active set without justification. Furthermore, he alleged that the foundation forces software upgrades on validators, which he describes as a violation of validator sovereignty.
The platform’s current technical setup supports some of these claims regarding concentration. Hyperliquid currently operates with only 24 active validators, with plans for a modest expansion to 27. This is a far cry from the thousands of nodes found on larger permissionless networks.
Despite these concerns, a Hyperliquid whale recently defended the $40 level with a significant long bet, suggesting that some high-net-worth traders remain confident in the platform’s liquidity.
Motivations and industry competitive landscape
Observers have pointed out that Kyle Samani’s Multicoin Capital exit in February 2026 provides a specific context for these criticisms. His former firm reportedly held exposure to protocols that compete directly with Hyperliquid, leading some to question the timing of his public targeting of the platform following the MAS alert.
Hyperliquid has typically held its position in the face of similar decentralization critiques in the past.
The platform maintains that its technology remains unchanged despite the Singaporean regulatory alert. It continues to utilize a custom Layer-1 blockchain and the HyperBFT consensus algorithm, which allows the network to process up to 200,000 orders per second. How the project manages the tension between this high-performance engineering and the demand for transparency may dictate its future standing with institutional users.
While the MAS alert marks a reputational challenge, the outcome for Hyperliquid will likely depend on its roadmap for HyperCore and HyperEVM. The team’s commitment to self-custody serves as its primary defense against custodial regulations. However, as global oversight of DeFi intensifies, the definition of a “permissionless” protocol is becoming a central point of legal and technical contention.