$2.9 trillion on-chain deal circumvents US taxes, Harvard Chinese face siege on Wall Street
Author: Lin Wanwan
Original title: A Chinese Harvard did a $2.9 trillion business, Wall Street teamed up to sue him
When you buy an IPO, at least four companies are sharing money with you: brokerage firms, underwriters, custodian banks, and trading platforms.
Each of them costs a sum of money. Of course, this is a common rule for A shares, US stocks, and Hong Kong stocks, and has not changed in over 100 years.
On May 13, 2026, two century-old trading platforms in Chicago and New York suddenly discovered that a trading site had bypassed all of these pumping points.
It is registered in Singapore and was founded by a young Chinese graduate from Harvard. It has only 11 employees and serves users around the world. A few days later, two century-old trading platforms in Chicago and New York joined forces to find US regulators and demand that this website be shut down.
That night, four top investment banks, as lead underwriters, priced the AI chip company Cerebras's IPO at $185 per share.
Cerebras' rival is Nvidia, which is the biggest tech stock IPO to date in 2026, raising $5.5 billion, the biggest in the US since Uber rang the bell in 2019.
Underwriting fees are charged at 4% to 7% of the total IPO, and the four investment banks split about $220 million to $380 million in underwriting commissions that night.
This money goes into their US accounts, pays US corporate income tax, pays bonuses to US employees, and employees then pay US personal income tax. Every step is a tax collection point for the US Treasury.
At the same time, on a website called Hyperliquid, Cerebras' pre-IPO perpetual contract was being traded, with the contract code $CBRS and launched on May 1.
The pre-IPO perpetual contract means that a company hasn't gone public yet, but you can already place an online order to bet on its future stock price. Hyperliquid is a program that provides this ordering service.
On May 13, the contract price was $291, which was 57% higher than the $185 agreed upon by the four investment banks. 24-hour trading volume of $230 million.
Hyperliquid takes about 0.025% of the matchmaking fee, which is equivalent to $57,500.
This money goes into an on-chain account, doesn't pay US corporate income tax, and doesn't go through any Wall Street intermediaries.
Of course, compared to the hundreds of millions of dollars split between the four Wall Street investment banks that night, $57,500 is only a fraction.
But the reason ZERO became news is because it points to a future where the US Treasury is very uncomfortable: any global asset can be traded on the chain for 24 hours, and the US doesn't receive a single cent in tax.
Two days later, on the afternoon of May 15, 2026, a Bloomberg exclusive came.
CME of the Chicago Mercantile Exchange and ICE, the parent company of the New York Stock Exchange, joined forces to find the CFTC (US Commodity Futures Supervisory Authority) and members of Congress to require that Hyperliquid be regulated by the US, mandatory real-name authentication, and mandatory transaction monitoring.
The reasons they say are “market manipulation” and “sanctions evasion.”
The term compliance is not the same thing as “legal” in the US financial system. More often, it refers to whether the US can derive corresponding benefits from it.
Hyperliquid didn't violate US law, but it didn't pay taxes to the US.
This is probably why CME and ICE sued Hyperliquid to the CFTC.
Hyperliquid has circumvented the right to collect taxes
The first thing that made CME and ICE start feeling wrong happened on the weekend of February 28, 2026.
On that day, the United States and Israel jointly attacked Iran. Iran is OPEC's fourth largest oil producer, and the Strait of Hormuz carries one-third of the world's maritime crude oil transportation.
But it was a Saturday, Chicago CME closed, London ICE closed, and Singapore SGX closed. Oil prices around the world were frozen from Friday afternoon to Sunday evening in New York time.
In the week before the war, the daily trading volume of WTI crude oil perpetual contracts on Hyperliquid was around $21 million. The weekend after the war broke out, the daily trading volume of the same contract soared to $1.7 billion, close to 250 times.
On March 20, JPMorgan published a research paper by top analyst Nikolaos Panigirtzoglou. The global capital flow research report he wrote is on the table of the world's largest hedge funds, sovereign funds, and central banks.
In that research report, he used a very restrained phrase:
“CME's traders simply can't react.”
The meaning of this sentence is that an oil price transaction that was supposed to have been traded on CME, paid clearing fees, generated commissions, and eventually became part of the US GDP was traded on Hyperliquid, and nothing was left in the US.
In early May, CFTC Chairman Michael Selig publicly stated at an industry conference that on-chain platforms such as Hyperliquid may begin to influence the spot or futures prices of registered platforms.
On the afternoon of May 14, Cerebras rang the bell and opened for $350. The next day, on the afternoon of May 15, Bloomberg exclusive.
From the launch of HIP-3, to the JPMorgan report, to Cerebras ringing the bell, to the Bloomberg exclusive, it was a total of 214 days. The moat, which is over 100 years old, was torn apart in 7 months by a piece of code.
So to understand why US regulation cares so much about an 11-person company, we must first look at how Hyperliquid has circumvented the entire tax collection system.
Hyperliquid launched in 2023. Co-Founder Jeff Yan, Palo Alto, grew up in a Chinese immigrant family and raised by a single parent who was an accountant.
In 2012, he represented the US team in the International Physics Olympiad with a silver medal, a second-year gold medal, and the Harvard Full Award. After graduation, I went to Hudson River Trading (the world's top quantitative trading company), and later started my own market making company in Puerto Rico called Chameleon Trading (Chameleon Trading).
After the FTX crash in 2022, he and an anonymous Harvard student began writing a full-chain, 24-hour unaffiliated, company-only, program-only trading platform. Then they made an anti-Silicon Valley screenplay decision not to allow VC.
Yan has publicly declined a multi-billion dollar VC offer. His reasons were:
“If we want to build a truly neutral platform that everyone can build on, then we can't have insiders. VC has taken a lot of tokens, and it will become a scar on this network.”
He used the money he earned from his trading company to launch the entire project. The team size is always between 10 and 14 people. In November 2024, Hyperliquid launched the HYPE token, which was directly airdropped 31% to early users, one of the largest user allocations in crypto history, leaving no money for VC.
By the end of 2025, these 11-person programs accounted for 70% of the market share of on-chain perpetual contracts, with a total trading volume of $2.9 trillion in 2025, more than Coinbase International, Crypto.com, and HTX combined.
Perpetual contracts are a derivative invented in the crypto world and are roughly equivalent to “futures that never expire.” Traditional futures have a delivery date, and positions must be closed when they expire. Perpetual contracts don't have a delivery date, so you can keep a position and are suitable for betting on short-term price fluctuations. Hyperliquid is the largest matchmaking platform for this type of contract.
But for traditional finance, these are still internal affairs in the crypto world. CME glances occasionally and ICE doesn't look at it at all.
Until October 13, 2025, Hyperliquid launched an upgrade called HIP-3.
The rules of HIP-3 are that anyone can open a new market and trade anything on this app, as long as they have pledged around $25 million in Hyperliquid tokens as a deposit. Valuation of US stocks, bonds, foreign exchange, commodities, and private equity firms that haven't even gone public.
This step changed the authority to open a new market from “requiring regulatory approval” to “just pay for it.”
A few months after the launch of HIP-3, more than 250 US stock perpetual contracts, Tesla, Nvidia, and Apple, appeared on the chain. Perpetual contracts for synthetic OpenAI valuation and synthetic SpaceX valuation have been launched one after another. Hyperliquid received an on-chain perpetual contract authorized by the S&P 500, followed by Cerebras Pre-IPO Perpetual.
The margin for the WTI crude oil perpetual contract is USDC, a stablecoin that is anchored to the US dollar 1:1, and has nothing to do with crypto tokens. The people who came here to place orders were hedge fund traders who bet on the price of oil.
By early 2026, the market on HIP-3 contributed 30% of Hyperliquid's daily trading volume, with oil and gas and precious metals accounting for 67%.
This system circumvents far more than compliance issues. It bypasses the entire US financial infrastructure's tax-drawing path.
CME's dominance has nothing to do with its matchmaking speed. CME is far superior to Hyperliquid in terms of matching speed.
The reason why CME is a CME depends on its identity. Entities registered in the US report to the SEC and CFTC, pay taxes to the IRS, and pay liquidation fees to the US Treasury. It is part of the US sovereign financial system.
Hyperliquid can do today's scale without technology. Technically, Binance, Coinbase, and CME can do similar things.
What is special about Hyperliquid is that it has on-chain settlement, serves global users, and its profits do not go through the US system at all.
However, this torn moat has little to do with technology; it has a lot to do with the right to collect taxes.
What do CME and ICE care about
To understand why CME and ICE are so nervous, take a look at the two names first.
CME is the trading platform behind the rise and fall of oil prices, corn, and gold futures in the news. It started in Chicago, has a history of 178 years, and is the largest derivatives trading platform in the world.
ICE is another century-old giant. It owns the New York Stock Exchange (NYSE), London Brent crude oil futures, and has almost a monopoly on US soybean, cotton, and coffee futures.
Together, these two companies are basically “pricing power representatives” of America's traditional financial infrastructure.
Let's take a look at their complaint. There are three reasons for accusing Hyperliquid: oil price manipulation, sanctioned countries using it to evade sanctions, and insider trading. Sounds fair.
However, the following few facts unquestionably reveal the true purpose of this complaint.
On February 19, 2026, the CME officially announced that its crypto futures and options will begin 24-hour trading on May 29, three months before the Bloomberg report “CME and ICE push for US regulation and suppression of oil trading in the crypto sector” came out.
On May 14, the day Cerebras rang the bell, and the day before the Bloomberg report, CME also announced that it will launch joint crypto index futures with NASDAQ on June 8.
While saying goodbye to people's “all-day trading irregularities,” CME is about to start trading all day. While saying “the on-chain market distorts prices,” they are tokenizing and considering issuing coins themselves.
The story on ICE's side is the same.
In October 2025, ICE announced an investment forecast market of $2 billion, with a valuation of $9 billion. ICE's cumulative investment in the forecast market reached $1.64 billion by March 2026.
In the prediction market, users can bet on the outcome of future events, such as which candidate will be elected and which stock will rise.
Like Hyperliquid, it has circumvented CFTC's full regulation, and like Hyperliquid, it is what the industry calls an “on-chain savage.”
However, ICE holds a share of 1.64 billion US dollars in the prediction market, which means that a large portion of the future money earned by the platform will return to the US in the form of ICE equity dividends and enter the US tax system.
ICE also invested in OKX (one of the world's largest crypto trading platforms) in March 2026, valued at $25 billion. In January 2026, ICE announced that it would build its own on-chain securities infrastructure. The NYSE is developing a 24-hour tokenized securities platform.
Crypto analyst ZachXBT's question on X can be reduced to one sentence:
“While putting $1.6 billion into the prediction market and lobbying to regulate Hyperliquid, why not worry about predicting the market?”
Looking at these things together, CME and ICE are not opposed to decentralization, 24-hour transactions, or on-chain transactions.
They are opposed to on-chain transactions where they don't own shares, can't withdraw brokerage fees, and the US Treasury doesn't receive taxes.
The prediction market has American shareholders such as ICE acting as intermediaries and complies. OKX has ICE's investment and is moving towards compliance.
Hyperliquid doesn't have anything, so it's not compliant.
The boundary between compliance and non-compliance is probably not as simple as the three reasons described in the complaint.
$29 million is not legal fees
Hyperliquid probably knew that day would come.
On February 18, 2026, it donated $29 million to a Washington nonprofit called Hyperliquid Policy Center. CEO is Jake Chervinsky, one of Washington's most senior lawyers in the crypto industry. The policy advisor is from Sullivan & Cromwell, one of Wall Street's oldest law firms, and worked for Rockefeller and Morgan 100 years ago.
For the fourth year in a row, the Chief Policy Officer was named a top lobbyist by “The Hill”, the most authoritative list of policy influence in Washington's political circles.
K Street is a street on the north side of the White House in Washington. America's largest lobbying companies gather on this street. “K Street” is synonymous with a “lobbying group” in the American political context.
Hyperliquid hires the most expensive guy on the street.
On the same day that the May 15 Bloomberg report came out, Jeff Yan himself had already met with policy makers in Washington.
This amount of $29 million is written on the account for legal services and policy advice, but when viewed as a financial link, it's more like a down payment of a ransom Hyperliquid paid for itself.
Hyperliquid is actively turning a portion of its profits into a form that the US system can extract. Lawyers' fees will be used by Sullivan & Cromwell's partners to pay US income tax.
The cost of compliance will turn into the salaries of a bunch of advisors and lawyers in Washington, who also pay US income tax. Possible future CFTC registration fees will go directly to the US Treasury. So are possible future fines.
Jake Chervinsky's position is written as legal adviser, and his actual function is payee. Sullivan & Cromwell's position was described as a law firm, and the actual function was a channel. The K-Street lobbyists write policy advisors; their actual function is an intermediary.
This is a necessary path for every crypto-native project to move from “barbarian” to “compliant.”
Coinbase walked this path, was sued, investigated, and fined by the SEC, and eventually listed on the NYSE to become a compliant company. Binance followed this path and reached a $4.3 billion settlement with the US Department of Justice, CFTC, and Treasury in 2023. Founder Zhao Changpeng pleaded guilty to prison, and Binance continues to operate until now. Kraken walked by, Ripple walked by.
What they all have in common is that after being penalized enough, they became “compliant” companies.
Another meaning of “compliance” is that every one of their transactions now goes through the US system. Commission tax, employee tax, shareholder income tax. The period of time they slipped through the eyes of the US Treasury was basically over.
Hyperliquid's $29 million is just the beginning.
If the CFTC eventually forces it to register, it faces two options.
The first option, to accept registration, become a compliant company, lose its existing global anonymous user base, and become another Coinbase.
The second option, refusing to register, getting IP blocked by the US, cutting off the USDC channel, and suing the founder, became another BitMEX that was tamed or destroyed (a crypto trading platform sued by the US Department of Justice in 2020 for non-compliance; the founder finally pleaded guilty).
There may be other possibilities between these two options, but it's hard to imagine which one would allow Hyperliquid to continue doing business today. In other words, a matchmaking fee of 57,500 dollars can completely bypass the US Treasury's business.
Bypassing the path of regulation with code is probably getting harder.
A sufficiently large on-chain market will sooner or later face a choice: either find a way to make a small profit with the US treasury, or bear the cost of being evicted from the US market.
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