Connecticut Attorney General William Tong has issued an consumer alert warning residents about unregulated, offshore “decentralized finance” (DeFi) cryptocurrency exchanges, after at least one state consumer was deceived into depositing $200,000 that is now unrecoverable. Joined by Banking Commissioner Jorge Perez, the September 3, 2026 alert names GMX, Gains Network, dYdX, Aevo, Drift Protocol, Vertex Protocol, and Hyperliquid as platforms operating outside state and federal safeguards.
The Consumer Warning
The platforms are “built to lure investors in with promises of easy access and bigger returns,” Tong said, and investors who run into trouble “will be stranded with little to no recourse” while the platforms keep the profits. “This isn’t innovation, it’s exploitation,” he added. Perez said unregulated offshore platforms “operate outside the safeguards that legitimate regulated financial institutions are required to follow,” leaving consumers to assume they have no protections when a platform evades U.S. oversight.
How Offshore DeFi Bypasses Protections
DeFi markets itself as open-access finance run by software and smart contracts, but many of the largest platforms are centralized corporate operations with opaque management, often registered in offshore jurisdictions such as Singapore and the Cayman Islands. Unlike registered U.S. exchanges that verify identities through Know Your Customer checks, offshore platforms typically require only a digital wallet, letting users trade anonymously and creating openings for money laundering, sanctions evasion, and activity by state-backed actors such as North Korean hackers.
Global Regulators Step In
The alert points to growing international scrutiny. In May 2026, the United Kingdom’s Financial Conduct Authority issued a public warning designating Hyperliquid and its foundation as unauthorized, while the Monetary Authority of Singapore placed the platform on its Investor Alert List as one of the first DeFi protocols flagged for unauthorized derivatives activity. The focus on Hyperliquid fits a broader pattern, from warnings that U.S. regulation is the exchange’s biggest long-term risk to compliance monitoring that Chainalysis recently extended to its HyperEVM chain.
What Connecticut Consumers Should Do
Connecticut has strengthened protections for digital-asset consumers, including new safeguards for cryptocurrency ATMs, but Tong cautioned that cryptocurrency and decentralized trading transactions are generally irreversible. Consumers who suspect they have been targeted by an unregulated overseas exchange are urged to report the matter to the Office of the Attorney General immediately.
