Connecticut officials have warned residents about the risks of using unregulated offshore decentralized finance platforms after a state resident reportedly lost access to $200,000 deposited following a deceptive solicitation.
The Connecticut Attorney General’s Office said Sept. 3 that the resident was persuaded by someone claiming to know them to transfer the money to an unnamed, unregulated DeFi exchange. Officials did not disclose the identity of the individual involved, the platform used, or when the transaction took place.
The resident was unable to recover the funds, prompting Attorney General William Tong and state Banking Commissioner Jorge Perez to issue a consumer warning about offshore crypto platforms. Officials said users can face limited options for recovering money following fraud, security breaches, platform failures or disputes.
Tong said some platforms can attract users with easy access and the prospect of higher returns while offering limited protections if something goes wrong. He urged residents to research a platform and understand what safeguards are available before depositing funds.
The state alert identified GMX, Gains Network, dYdX, Aevo, Drift Protocol, Vertex Protocol and Hyperliquid as examples of offshore DeFi platforms operating outside U.S. regulatory safeguards. Connecticut did not allege that any of these seven platforms was involved in the resident’s $200,000 loss.
Officials also questioned the extent to which some platforms described as decentralized rely on centralized entities, management teams, administrators or other forms of control. Some services allow users to trade by connecting a crypto wallet rather than completing the identity verification commonly required by regulated U.S. financial institutions.
Connecticut officials said limited identity checks can create additional risks involving money laundering, sanctions evasion and transactions associated with state-backed hacking groups. Perez urged residents to verify whether a platform is properly registered before transferring funds.
Leverage was another major concern raised by the state. Some offshore DeFi exchanges offer perpetual contracts with leverage of 50x, 100x or even 250x. At 100x leverage, a move of roughly 1% against a position can potentially consume the trader’s initial margin, before accounting for fees and differences in liquidation mechanisms.
Perpetual contracts do not have fixed expiration dates and generally use funding payments to keep their prices aligned with an underlying market. Traders can use them to speculate on an asset’s price without directly purchasing the asset.
The Commodity Futures Trading Commission has said perpetual contracts can also be offered through regulated exchanges operating under U.S. oversight. The agency advises traders to use registered venues, understand contract terms and pricing mechanisms, and review margin and liquidation requirements.
Connecticut’s warning also highlighted synthetic perpetual contracts tied to assets such as Apple, Tesla, Nvidia, SpaceX, currencies and commodities. These products can provide price exposure without giving traders ownership of the underlying asset.
A perpetual contract linked to a company generally does not provide shareholder rights, dividends, voting privileges or a claim on the company’s assets. Instead, traders are exposed to price movements through the contract, along with funding costs, collateral requirements and liquidation rules.
Officials also warned that platforms with centralized elements could potentially change pricing systems, remove markets, suspend trading or restrict withdrawals. Investors were encouraged to determine who controls a platform and what legal remedies are available before connecting a wallet or depositing collateral.
Access by U.S. users remains another concern. Connecticut said some offshore platforms claim to restrict Americans but alleged that users can attempt to bypass geographic limitations through tools such as virtual private networks or public application programming interfaces. The state cited web-traffic data estimating that 22.6% of Hyperliquid’s traffic originates from the United States.
Regulators outside the U.S. have also issued warnings involving some of the platforms named in Connecticut’s alert. The U.K. Financial Conduct Authority listed Hyperliquid as unauthorized in May 2026 and warned that the platform could be targeting British consumers.
The FCA said customers dealing with an unauthorized firm cannot use the Financial Ombudsman Service to pursue complaints and generally do not receive protection from the Financial Services Compensation Scheme if the company fails.
Singapore’s Monetary Authority has also placed Hyperliquid on its Investor Alert List over unauthorized derivatives activity. Neither the British nor Singaporean warning establishes a connection between Hyperliquid and the Connecticut resident’s reported loss.
Connecticut has separately introduced restrictions targeting another area of cryptocurrency-related fraud. The state prohibited cryptocurrency kiosks beginning in January 2026, while federal requirements continue to impose registration and anti-money-laundering obligations on operators covered by federal rules.
The broader scale of cryptocurrency-related fraud has also drawn attention from federal authorities. The FBI’s 2025 Internet Crime Report recorded $7.2 billion in reported U.S. losses from cryptocurrency investment fraud, making it the largest source of reported financial losses within that category.
According to the FBI, scammers often approach victims through social media, text messages, advertisements or dating applications before directing them toward fraudulent investment platforms.
Victims can also be targeted a second time after losing money. In a July warning, the FBI said scammers impersonating its Internet Crime Complaint Center had contacted previous victims while falsely claiming that funds had been recovered or offering assistance in retrieving lost money.
Connecticut officials advised residents not to pay supposed recovery specialists or individuals claiming to be attorneys when they demand upfront fees to retrieve cryptocurrency. People who suspect fraud were encouraged to preserve wallet addresses, transaction records, messages, emails and other communications before reporting the incident to authorities.
