Connecticut Attorney General William Tong and Banking Commissioner Jorge Perez issued a formal consumer alert on September 3, 2026, warning residents about the risks of unregulated offshore decentralized finance platforms. The alert followed a case in which a Connecticut resident lost $200,000 after being persuaded to deposit funds into an unregulated DeFi exchange and was unable to recover the money.
The notice listed GMX, Gains Network, dYdX, Aevo, Drift Protocol, Vertex Protocol, and Hyperliquid as examples of platforms operating outside U.S. state and federal rules. Officials did not claim the resident used any of those specific services, but stressed that such venues lack the consumer safeguards applied to licensed banks and registered exchanges.
Tong said the platforms are “built to lure investors in with promises of easy access and bigger returns,” while downplaying the lack of meaningful recovery options when problems arise. Perez advised users to verify a platform’s registration status before sending money, warning that even brief research could prevent severe losses.
The alert outlined structural concerns including the use of digital wallets without identity verification, potential facilitation of money laundering and sanctions evasion, and the ease of circumventing U.S. restrictions with virtual private networks. Officials also highlighted extreme leverage—up to 50x, 100x, or 250x on some offshore venues—and synthetic perpetual contracts tied to assets such as Apple, Tesla, Nvidia, and SpaceX, which can mislead users into thinking they hold exposure to actual shares.
International regulators have also acted: the UK Financial Conduct Authority warned about Hyperliquid in May 2026, and the Monetary Authority of Singapore placed the protocol on an investor-alert list for unauthorized derivatives activity. Connecticut has already added crypto ATM rules, but officials emphasized that most digital-asset transfers cannot be reversed. Residents were urged to confirm whether a service falls under U.S. regulation, keep full records of transfers and messages, treat unsolicited recovery offers with skepticism, and report suspected fraud to the Attorney General’s office.
