Hyperliquid Faces Backlash Over Permissionless Claims Following Singapore Regulator Warning

A prominent Silicon Valley investor has publicly challenged Hyperliquid's foundational claims about decentralization, reigniting a debate that has long surrounded one of crypto's most talked-about trading platforms.

Kyle Samani, entrepreneur and chairman of Forward Industries, directly accused Hyperliquid of deceiving the public regarding its permissionless infrastructure. His comments came shortly after Singapore's central bank flagged the platform for local investors.

On June 26, the Monetary Authority of Singapore (MAS) added Hyperliquid to its Investor Alert List (IAL). The IAL is designed to flag platforms that Singaporean residents might wrongly assume hold MAS licenses or government-backed authorization. Importantly, inclusion on the list does not constitute a ban or formal enforcement action. Rather, it serves as a caution that users may be left without regulatory protections in the event of platform-related issues.

Hyperliquid pushed back swiftly, clarifying that it has never marketed itself as MAS-licensed or government-authorized. The platform emphasized that all user funds remain under full self-custody and that every transaction is settled transparently on-chain. According to Hyperliquid, the MAS alert changes nothing about how the network operates.

Hyperliquid is not the only exchange to receive such a warning. Bybit was similarly flagged by MAS earlier in June. Regulators in Singapore have been steadily increasing pressure on offshore crypto exchanges throughout 2026, requiring unlicensed platforms to either obtain proper regulatory approval or restrict access to Singapore-based users.

Samani's critique, however, went well beyond the regulatory context. He argued that Hyperliquid fails to meet even the most basic standards of a truly permissionless protocol. In his view, two minimum conditions must be satisfied: the protocol's code must be fully open source, and validators must be geographically distributed across multiple jurisdictions rather than clustered in one location.

He also raised serious governance concerns. Samani alleged that the Hyperliquid Foundation retains the power to "jail" validators — effectively removing them from the active validator set — without being required to provide any justification. Additionally, he claimed the Foundation can force software upgrades onto validators, undermining their autonomy over their own node infrastructure.

These claims are not entirely without basis. Hyperliquid currently operates with only 24 active validators, with plans to expand that number to just 27. Rather than releasing full source code, the network distributes a signed binary through its node repository. The development team has acknowledged this, stating that open-sourcing the codebase will occur once HyperCore reaches feature completion.

Still, some observers have noted that Samani's motivations deserve scrutiny. He departed from Multicoin Capital in February 2026 — a firm that held substantial positions in protocols competing directly with Hyperliquid. Several analysts have suggested this context colors his public criticism.

Hyperliquid has faced similar decentralization challenges in the past and has generally maintained its stance without significant concessions. How it chooses to handle this latest wave of pressure — from both regulators and industry insiders — could meaningfully influence its reputation among institutional participants in the coming months.