Hyperliquid Faces Harsh Criticism From Former Multicoin Capital Chief

A sharp critique from one of crypto’s better-known investors has put decentralized exchange Hyperliquid back in the spotlight, reigniting debate over transparency, regulation, and what decentralization should actually mean in practice.

Kyle Samani, now Chairman of Forward Industries after stepping down as managing partner of Multicoin Capital in February 2026, publicly accused Hyperliquid of embodying what he described as some of the crypto industry’s most persistent failures. In a now deleted post on X, Samani argued that the platform raises red flags not just at a technical level, but also in terms of governance and ethics.

Among his strongest claims was that Hyperliquid’s founders deliberately relocated abroad to avoid regulatory scrutiny, a move he framed as emblematic of a broader problem within parts of the decentralized finance ecosystem. He also alleged that the exchange enables illicit financial activity, including criminal and terrorist-related transactions, though no formal enforcement action has been announced against the platform.

Transparency versus decentralization

Samani’s criticism went beyond legal concerns. He pointed to Hyperliquid’s closed-source codebase and permissioned access controls as being fundamentally at odds with the principles of decentralization. In his view, a system that limits visibility and control cannot credibly claim to operate in the spirit of open, trust-minimized finance that crypto was originally built around.

These comments tap into a growing fault line in the industry, where platforms branded as decentralized increasingly rely on centralized decision-making, restricted infrastructure, or opaque operational models.

A broader shift in investment philosophy

The timing of the remarks is notable. After leaving Multicoin Capital, Samani has openly distanced himself from what he calls the “Web3 and dApp” narrative. While he remains optimistic about blockchain as a core financial infrastructure – specifically as an immutable asset ledger – his focus has narrowed considerably.

That shift is reflected in his work at Forward Industries, which he has repositioned as a Solana-focused treasury vehicle. The company currently holds roughly 6.98 million SOL, underscoring Samani’s belief that value in crypto will increasingly concentrate at the base-layer asset level rather than in application ecosystems.

Market shrugs off the criticism

Despite the high-profile nature of the accusations, Hyperliquid’s market performance has so far shown little sign of stress. Its native token, HYPE, rose by around 6% in early February 2026, supported by reports of growing institutional usage and new integration efforts.

The divergence between criticism and price action highlights a familiar dynamic in crypto markets, where adoption metrics and liquidity flows often outweigh reputational concerns – at least in the short term.

A debate that isn’t going away

Samani’s comments may not have dented Hyperliquid’s token price, but they add fuel to an ongoing debate about what decentralization should look like as crypto matures. As institutional capital becomes more involved and regulatory pressure increases, the tension between open ideals and controlled execution is likely to intensify, with platforms like Hyperliquid squarely in the crosshairs.

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