Connecticut officials have warned consumers about the risks of offshore decentralised finance (DeFi) cryptocurrency platforms after a resident lost $200,000 in an apparent deception and was unable to recover the funds.
The resident deposited the money into an unregulated DeFi exchange after being approached by someone who claimed to know them, state officials said on 3 September. The Connecticut consumer alert did not name the exchange involved or identify the person who solicited the transfer.
Connecticut Attorney General William Tong issued the warning alongside a statement from state Banking Commissioner Jorge Perez. They cited the dangers of financial losses, high-risk leverage, security vulnerabilities and the limited options available to customers seeking to recover money from offshore platforms.
Tong said services that promote easy access to cryptocurrency markets and the prospect of higher returns could leave investors with little or no recourse when something goes wrong.
The alert listed GMX, Gains Network, dYdX, Aevo, Drift Protocol, Vertex Protocol and Hyperliquid as offshore DeFi platforms operating outside United States regulatory protections. However, officials did not say the Connecticut resident had used any of those services, meaning the loss cannot be attributed to a named platform.
Many perpetual decentralised exchanges allow users to take leveraged positions directly from a digital wallet without purchasing the underlying asset. Unlike traditional futures contracts, perpetual DEX contracts do not have expiry dates. They carry risks linked to liquidation, funding rates, smart contracts and the oracles used to provide price information.
Connecticut officials said some offshore platforms offer leverage of 50 times, 100 times or as much as 250 times. Such levels mean even a relatively small market movement can wipe out the collateral deposited by a trader.
The Commodity Futures Trading Commission’s crypto perpetual-contract briefings state that high leverage is common on offshore exchanges, but is not an unavoidable feature of perpetual contracts. Leverage on regulated platforms is instead controlled through risk-management frameworks.
Activity on Hyperliquid has illustrated how quickly leveraged trades can approach forced liquidation during ordinary market movements. In May, a trader’s $20.32m bitcoin short position, opened with 40 times leverage, came to within about 1.5% of its liquidation price after the trader posted 499,900 USDC as collateral.
UK regulators have issued separate consumer-protection concerns about Hyperliquid. The Financial Conduct Authority lists it as an unauthorised firm that may be targeting people in the United Kingdom. Its warning says users would not have access to protection from the Financial Ombudsman Service or the Financial Services Compensation Scheme if problems arose.
Connecticut’s alert also addressed perpetual contracts linked to companies such as Apple, Tesla, Nvidia and SpaceX. Officials cautioned that these products represent leveraged bets on synthetic prices rather than ownership of the companies’ actual shares.
They added that the centralised owners of such platforms may be able to alter prices, remove assets from trading, or suspend trading and customer withdrawals.
The warning follows a separate case in which another Connecticut resident reported losing $228,000 through a fraudulent cryptocurrency opportunity in 2025. The victim, a retired physical therapist, lost money from investment and retirement accounts after an online operation promised lucrative returns and persuaded him to make repeated payments.
Officials also warned consumers about supposed recovery specialists and people claiming to be attorneys who seek upfront fees after an initial cryptocurrency loss. An FBI warning issued in July described criminals using artificial-intelligence-generated videos, spoofed government websites and false promises of recovered funds to target people who had already been defrauded.
The Connecticut consumer alert advises residents to check whether cryptocurrency services are registered, keep records of transactions and communications, and report suspected scams as soon as possible.
The state has introduced additional safeguards covering cryptocurrency ATMs. However, officials said decentralised transactions are generally irreversible, even where other consumer protections apply.
Separately, federal prosecutors are seeking about $47,000 in cryptocurrency allegedly taken from five victims in a technology-support and government-impersonation fraud scheme.
