Connecticut issues a consumer warning regarding offshore DeFi platforms, following a case where a resident transferred $200,000 to an unregulated platform after being misled, only to be unable to recover the funds later on. The state's prosecution authorities and banking regulatory agencies are using this incident to remind users that in the event of fraud, vulnerabilities, malfunctions, or disputes with offshore platforms, there is often no practical way to retrieve the funds.
Residents' losses trigger warnings
The state prosecution authorities stated that a person who claimed to know the resident induced them to deposit $200,000 into an unnamed DeFi trading platform. The official authorities have not disclosed the name of the platform, the time of the transfer, nor have they provided any information regarding the identity of the individual involved.
The State Attorney General William Tong stated that such platforms often attract users with higher returns and more convenient access methods, but when problems arise, users receive very little protection. The State Bank Commissioner Jorge Perez also reminded that before transferring funds, one should confirm whether the platform is regulated.
Seven platforms were named
Connecticut listed GMX, Gains Network, dYdX, Aevo, Drift Protocol, Vertex Protocol, and Hyperliquid in its warning, stating that these are all offshore DeFi platforms that are outside the scope of US regulatory protection.
The state government also emphasized that naming these platforms does not imply that they are directly related to the $200,000 loss. The officials are using this as an opportunity to point out that although some platforms claim to be decentralized, their operations may still rely on corporate entities, management teams, or other forms of centralized control.
High leverage and contract risks
This warning also mentions perpetual contracts. Connecticut states that some offshore platforms offer leverage of 50 times, 100 times, or even 250 times. Calculated at 100 times leverage, a price fluctuation of just about 1% in the opposite direction could quickly deplete the margin.
The state government also pointed out that some platforms offer contracts for tracking Apple, Tesla, NVIDIA, SpaceX, foreign exchange, and commodities, but such products do not grant ownership of stocks, dividend rights, or voting rights. Users only obtain price exposure. Officials also reminded that if platforms gain centralized control, they may adjust pricing, suspend trading, or stop withdrawals.
Regulatory authorities continue to tighten their warnings
Connecticut also mentioned that the Financial Conduct Authority of the UK and the Monetary Authority of Singapore have previously issued relevant warnings regarding Hyperliquid. The state government also stated that some platforms may use VPN or publicly disclose API to bypass regional restrictions, and may still attract American users.
FBI stated in the 2025 Internet Crime Report that crypto investment fraud has become one of the biggest sources of losses in such cases in the United States. As a result, Connecticut is once again reminding residents not to pay fees in advance to so-called "fund recovery" services or to individuals posing as lawyers, and to keep records of their wallets, transfer information, and chat logs.
