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Wallets tied to North Korea’s Lazarus Group sold more than $30 million in Bitcoin on Hyperliquid over the past three weeks, blockchain analytics firm Arkham found, days before Kraken’s parent company Payward confirmed advanced talks to bring the decentralized exchange to regulated US markets.
The activity was identified through public blockchain records, which allow transactions between addresses to be traced but do not reveal the identities of individuals controlling exchange accounts. Crypto investigator ZachXBT first identified the addresses in 2024, while Arkham later labeled them as connected to Lazarus.
The reported transactions have renewed attention on the challenge of detecting Crypto Money Laundering when illicit funds move across different tokens, wallets, exchanges and jurisdictions.
However, the blockchain activity does not by itself establish that Hyperliquid facilitated the transfers or knew that the wallets were controlled by a sanctioned entity. It also does not establish that the receiving exchanges credited the assets to unrestricted customer accounts.
Kraken said compliance is central to its operations and that it continuously monitors blockchain activity with the assistance of analytics providers. The exchange said its controls are intended to identify and block assets connected to sanctioned wallets before they reach the platform.
LBank similarly said it uses industry-standard compliance tools for continuous monitoring, while describing illicit transfers across platforms, blockchains and jurisdictions as a broader industry challenge.
KuCoin said it could not confirm the reported transactions without reviewing the underlying wallet information. The exchange also noted that public blockchain records do not reveal every action taken after assets arrive on a centralized platform, including restrictions placed on accounts, regulatory reporting and other internal controls.
The reported transfers have particular significance in the United States because the Treasury Department has sanctioned the Lazarus Group and identified it as a cyber organization controlled by the North Korean government.
U.S. authorities have previously connected Lazarus to major digital-asset thefts, including the $625 million Ronin Network attack in 2022. The group has become one of the most prominent examples of how state-sponsored cyber operations can intersect with cryptocurrency markets.
The latest activity highlights the difficulties regulators face when investigating potential Crypto Money Laundering through decentralized trading venues. Unlike traditional exchanges and brokerages, Hyperliquid’s principal interface allows users to connect a cryptocurrency wallet and trade without establishing a conventional brokerage account.
At the same time, the underlying blockchain creates a public transaction trail. Blockchain intelligence companies such as Arkham can use that information to trace transfers between addresses that have been publicly identified or labeled.
That transparency, however, does not eliminate the compliance challenge. Funds can move through multiple wallets and assets before reaching another trading venue, potentially making it harder to determine their original source.
The presence of assets associated with a sanctioned actor on a decentralized platform therefore does not automatically mean the platform assisted the activity. Establishing responsibility would require evidence showing who controlled the relevant wallets, what the platform knew and what controls were available or applied at the time.
These issues could become particularly important if Hyperliquid-linked products are made available to U.S. customers. Regulators would need to consider sanctions screening, customer identification and account-level controls alongside the technological architecture of the platform.
The Lazarus-linked transactions emerged as Payward, the parent company of Kraken, reportedly holds advanced discussions with Hyperliquid Labs over a potential U.S. offering.
Bloomberg reported that Payward is exploring a structure under which selected Hyperliquid perpetual contracts could become available to American traders through Bitnomial, its CFTC-regulated derivatives business.
People familiar with the discussions told Bloomberg that Payward had presented the Commodity Futures Trading Commission with an outline of the proposed arrangement. Any agreement would still require regulatory approval, while financial terms had not been disclosed.
Payward and Hyperliquid Labs declined to comment to Bloomberg.
The prospect of bringing Hyperliquid-related products into the U.S. market was publicly raised by President Donald Trump during an August 19 White House event. Referring to CFTC Chair Michael Selig, Trump said he understood that the regulator was working to bring Hyperliquid into the United States in a “fully compliant and legal fashion.”
A regulated arrangement could allow eligible U.S. customers to access selected products through a registered operator rather than directly through Hyperliquid’s permissionless interface. That distinction is significant because commodity derivatives offered to American retail customers generally operate within a regulatory framework involving registered trading, clearing and brokerage entities.
For regulators examining Crypto Money Laundering, the proposed structure also raises questions about how wallet-based activity would interact with traditional compliance requirements.
Payward already possesses substantial infrastructure for regulated derivatives operations. The company completed its acquisition of Bitnomial in May in a transaction valued at up to $550 million in cash and stock.
The acquisition provided Payward with control of a designated contract market, derivatives clearing organization and futures commission merchant. Those registrations collectively cover trading, clearing and brokerage functions under CFTC oversight.
Kraken subsequently launched regulated perpetual products for eligible U.S. customers in June, allowing supported users to trade spot, margin, traditional futures and perpetual futures through Kraken Pro using Bitnomial’s regulated framework.
Hyperliquid has become one of the largest venues for decentralized perpetual trading, making the compliance implications of its expansion particularly significant.
The platform operates its main exchange through HyperCore, an on-chain trading system responsible for order matching, margin calculations and liquidations. Users trade through connected crypto wallets, while the platform’s primary permissionless interface does not require a traditional brokerage account.
Perpetual futures differ from conventional futures because they have no fixed expiry date. Funding payments between long and short traders help keep contract prices aligned with their underlying assets, allowing positions to remain open provided traders maintain the required margin.
According to DefiLlama data cited in the original report, Hyperliquid had processed approximately $5.19 trillion in cumulative perpetual trading volume at the time of writing. Its perpetual markets recorded about $60.44 billion in seven-day volume and $204.95 billion over the preceding 30 days.
Open interest was approximately $13.3 billion, representing the notional value of outstanding perpetual positions. DefiLlama also recorded more than $32.6 billion in cumulative liquidations, including roughly $2.25 billion during the previous 30 days.
The platform’s architecture extends beyond markets directly operated by its core protocol. Hyperliquid Improvement Proposal 3, or HIP-3, allows outside developers to launch independent perpetual exchanges using HyperCore.
Under the framework, deployers can determine the contracts they offer, collateral requirements, leverage limits, funding parameters and price sources after staking 500,000 HYPE. Validators can slash the stake if a deployer manipulates an oracle or violates market rules.
HIP-3 operators receive half of the trading fees generated by their markets. More recent permissioning tools tested on the network could also allow individual deployers to restrict access to approved wallets.
Those features could become increasingly relevant to discussions about Crypto Money Laundering, particularly as decentralized infrastructure moves closer to regulated financial markets.
The reported Lazarus-linked transactions do not prove wrongdoing by Hyperliquid or the exchanges that allegedly received the assets. But they demonstrate why regulators and market operators continue to focus on tracing digital assets across decentralized protocols, centralized exchanges and multiple blockchain networks.
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