On February 9, Kyle Samani, former co-founder of Multicoin Capital, publicly criticized the derivatives protocol Hyperliquid, claiming it is closed-source and facilitates criminal and terrorist activity. His remarks quickly ignited widespread debate across the crypto industry and drew public rebuttals from multiple industry participants.
Many practitioners argued that the accusations were overly absolutist, reducing complex technical and regulatory issues to moral judgments without sufficient factual support.
Industry Responses: Closed Source vs. Security Is Not a Binary Issue
Jon Charbonneau, co-founder of DBA, responded point by point, highlighting several overlooked realities:
- The Hyperliquid founding team previously relocated due to regulatory pressures, underscoring the complexity of jurisdictional compliance
- Directly linking protocols to criminal activity is an excessive accusation, as traditional banks and public blockchains face similar misuse risks
- Closed-source strategies represent a pragmatic trade-off between security and competitive protection and are not uncommon, including among projects backed by Multicoin itself
These responses emphasized that protocol design requires balancing transparency, security, and long-term sustainability, rather than ideological positioning.
Token Design Becomes the Core Focus: “Real Cash Flow” as the Key Narrative
Andy, founder of The Rollup and investor at Good Idea VC, noted that Hyperliquid is forcing the industry to rethink tokenomics. He argued that over the next 1–2 years, projects unable to return real revenue to users—through buybacks or distribution mechanisms—will see their competitiveness decline sharply.
Future market focus, he suggested, will center on:
- Verifiable protocol revenue and on-chain activity
- Measurable economic value
- Transparent and programmable cash flow models
- Distribution mechanisms aligned with user incentives
This perspective reflects a broader industry shift from narrative-driven valuation toward fundamentals-driven assessment.
Rising Institutional Interest Validates Hyperliquid’s Business Model
McKenna, managing partner at Arete.xyz, revealed that several traditional financial institutions have begun evaluating Hyperliquid’s model, describing it as “cash-flow-driven with a community-first structure.”
According to disclosures, Hyperliquid operates with a team of approximately 11 people, yet reportedly generated around $800 million in revenue in 2025, much of which was allocated to token buyback mechanisms—a model considered rare in both crypto and traditional finance.
Community Polarization and Public Mockery from Crypto KOLs
Cobie, founder of echo.xyz and a prominent crypto KOL, openly mocked Kyle Samani’s comments, characterizing them as “jestergooning”—suggesting that extreme statements followed a brief absence from the industry.
The episode highlights the intensifying divisions within the crypto community over protocol design, security strategies, and regulatory pressure.
Compliance and Risk Identification Remain Central Industry Concerns
As DeFi protocols continue to scale, discussions around security, fund flows, and potential misuse risks are becoming increasingly critical. By leveraging on-chain risk monitoring tools such as Trustformer KYT, platforms can more effectively identify abnormal fund movements and high-risk behavior, strengthening compliance and risk management while supporting innovation.
Conclusion
The controversy surrounding Hyperliquid reflects more than a public dispute—it underscores a structural transition within the crypto industry. From open-source versus closed-source debates, to tokenomics anchored in real cash flow, and the long-term balance between innovation, security, and regulation, the ability to build transparent, sustainable, and value-driven economic systems will be decisive for long-term competitiveness.