Kyle Samani’s Explosive Takedown of Hyperliquid Sparks Industry-Wide Debate

In a stunning turn of events that has sent shockwaves through the cryptocurrency community, Kyle Samani, the recently departed co-founder of Multicoin Capital, has launched a scathing attack on Hyperliquid, one of the fastest-growing decentralized exchanges in the crypto space. Samani’s blistering critique comes just days after his resignation from Multicoin Capital, where he spent over a decade shaping the firm’s investment strategy and influencing the broader crypto ecosystem.

The controversy erupted on February 8, 2026, when Samani took to social media to deliver a damning assessment of Hyperliquid, calling it “everything wrong with crypto” and raising serious concerns about its operational model, governance structure, and potential risks to the broader cryptocurrency market. His comments have ignited a fierce debate about the future of decentralized finance, the importance of transparency in crypto projects, and the growing tension between different philosophical approaches to blockchain technology.

The Timing: Coincidence or Calculated Move?

Samani’s departure from Multicoin Capital on February 5, 2026, marked the end of an era for the prominent crypto investment firm. Having co-founded the company and served as a key decision-maker for over ten years, his exit was already generating significant speculation within industry circles. However, the timing of his Hyperliquid critique—just three days after stepping down—has raised eyebrows and fueled conspiracy theories about potential internal conflicts or disagreements over investment strategy.

The former Multicoin executive didn’t mince words in his assessment, targeting what he perceives as fundamental flaws in Hyperliquid’s architecture and business model. His critique centers on several key issues that he believes pose systemic risks to the cryptocurrency ecosystem.

Samani’s Core Criticisms: A Deep Dive

Closed-Source Architecture

One of Samani’s primary concerns revolves around Hyperliquid’s decision to maintain a closed-source codebase. In an industry that has historically championed open-source principles and transparency, this approach represents a significant departure from established norms. Samani argues that closed-source systems create an environment ripe for manipulation, hidden vulnerabilities, and potential backdoors that could compromise user funds and data.

“The fundamental promise of blockchain technology is transparency and verifiability,” Samani stated in his critique. “When you obscure the underlying code, you’re essentially asking users to trust you blindly—which is precisely what we’ve been trying to move away from in the crypto space.”

Permissioned Validator Set

Another major point of contention for Samani is Hyperliquid’s permissioned validator set. Unlike truly decentralized networks where anyone can participate in consensus, Hyperliquid maintains control over who can validate transactions on its platform. This centralization of power, according to Samani, creates multiple risks including potential censorship, manipulation of transaction ordering, and the ability to freeze or confiscate user funds.

“This isn’t decentralization—it’s a wolf in sheep’s clothing,” Samani argued. “They’re presenting themselves as a DEX while maintaining the same control mechanisms that centralized exchanges have always had.”

Jurisdictional Concerns

Samani also raised eyebrows by questioning Hyperliquid founder Jeff Yan’s decision to establish operations in Singapore, a jurisdiction known for its favorable regulatory environment and lack of extradition treaties with many countries. While Samani’s characterization of Yan as having “fled his home country” has been disputed, the underlying concern about regulatory arbitrage and potential evasion of oversight remains a point of discussion.

Crime and Terror Allegations

Perhaps most controversially, Samani suggested that Hyperliquid’s opacity could facilitate criminal activity and even terrorism financing. While he provided no specific evidence to support these claims, the accusation has added fuel to ongoing debates about the balance between privacy, decentralization, and regulatory compliance in the cryptocurrency space.

The Market’s Response: Voting with Wallets

Despite Samani’s serious concerns, the market has responded to Hyperliquid with overwhelming enthusiasm. The platform has experienced explosive growth, recently surpassing Coinbase in trading volume and establishing itself as a dominant force in the decentralized exchange landscape. This achievement is particularly remarkable given that Hyperliquid operates entirely on-chain, while Coinbase is a centralized exchange with significantly more resources and brand recognition.

The HYPE token, which powers the Hyperliquid ecosystem, has seen its market capitalization soar above $7 billion, making it one of the top 20 cryptocurrencies by market cap. This valuation reflects strong investor confidence in the platform’s technology, user experience, and growth potential.

The Multicoin Connection: A $40 Million Contradiction

Adding another layer of complexity to this controversy is the revelation that Multicoin Capital, the firm Samani co-founded, has been aggressively accumulating HYPE tokens. On-chain analysis has identified wallets linked to Multicoin that collectively hold over $40 million worth of HYPE tokens—a significant investment that appears to contradict Samani’s public criticism of the platform.

When confronted about this apparent contradiction, Samani’s response was characteristically direct: “I don’t work at Multicoin.” This terse reply has done little to quell speculation about potential disagreements within the firm or questions about whether Samani’s critique represents a genuine change of heart or a strategic positioning move.

Industry Reactions: Divided Opinions

The cryptocurrency community has responded to Samani’s critique with a mixture of support, skepticism, and outright dismissal. Supporters of Samani’s position argue that his concerns about centralization and transparency are valid and reflect broader issues that the industry must address to achieve mainstream adoption and regulatory acceptance.

Critics, however, have pointed out that Samani’s comments may be motivated by sour grapes or competitive positioning. Some have noted that Multicoin has investments in competing platforms and that Samani’s critique could be seen as an attempt to undermine a rising competitor.

Others have defended Hyperliquid’s approach, arguing that the platform’s success demonstrates that users prioritize performance, user experience, and features over ideological purity. They contend that the closed-source model allows for faster innovation and better security through obscurity, while the permissioned validator set ensures network stability and performance.

The Broader Implications: Philosophy vs. Performance

This controversy highlights a fundamental tension within the cryptocurrency industry between different visions of what decentralization means and how it should be implemented. On one side are purists like Samani who argue that true decentralization requires complete transparency, open participation, and resistance to censorship. On the other side are pragmatists who believe that some degree of centralization is necessary to achieve the performance, usability, and regulatory compliance required for mainstream adoption.

The success of platforms like Hyperliquid suggests that many users are willing to trade some degree of decentralization for improved functionality and user experience. This raises important questions about the future direction of the industry and whether the original vision of fully decentralized, permissionless systems is compatible with the demands of mass adoption.

Regulatory Considerations

Samani’s concerns about Hyperliquid’s potential to facilitate illicit activity also touch on broader regulatory issues facing the cryptocurrency industry. As governments around the world grapple with how to regulate digital assets, platforms that operate in regulatory gray areas or maintain opacity about their operations may face increased scrutiny and potential enforcement actions.

The tension between innovation and regulation is particularly acute in the cryptocurrency space, where the technology’s borderless nature and pseudonymous transactions create unique challenges for law enforcement and financial regulators. Platforms like Hyperliquid that push the boundaries of what’s possible with decentralized technology may find themselves at the center of these regulatory debates.

Looking Forward: The Future of Decentralized Finance

The controversy surrounding Samani’s critique of Hyperliquid is likely to have lasting implications for the decentralized finance (DeFi) sector and the broader cryptocurrency industry. It may prompt increased scrutiny of platform architectures, governance models, and transparency practices, potentially leading to new standards or best practices for DeFi projects.

At the same time, the market’s enthusiastic response to Hyperliquid suggests that there is significant demand for platforms that prioritize performance and user experience over ideological purity. This could lead to further innovation in hybrid models that attempt to balance decentralization with practical functionality.

Conclusion: A Watershed Moment for Crypto

Kyle Samani’s explosive takedown of Hyperliquid represents more than just a personal critique or industry disagreement—it’s a reflection of the fundamental tensions and competing visions that continue to shape the cryptocurrency landscape. As the industry matures and faces increasing pressure from regulators, investors, and users, these debates about the proper balance between decentralization, performance, and compliance will only become more intense.

Whether Samani’s concerns prove prescient or Hyperliquid’s approach represents the future of finance remains to be seen. What is clear, however, is that this controversy has sparked a necessary conversation about the values, risks, and trade-offs inherent in the cryptocurrency revolution. As the industry continues to evolve, these discussions will play a crucial role in determining which platforms, technologies, and philosophies ultimately prevail.

The coming months will be critical in determining whether Hyperliquid can maintain its momentum in the face of growing criticism and potential regulatory scrutiny, or whether Samani’s warnings about systemic risks will resonate with a broader audience and force a reassessment of what constitutes true decentralization in the modern crypto landscape.

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