Attorney General Warns Of Decentralized Finance Cryptocurrency Exchanges

Connecticut Attorney General William Tong is warning consumers about what he called significant financial and security risks associated with unregulated, offshore “decentralized finance” (DeFi) cryptocurrency exchanges.

These platforms, including GMX, Gains Network, dYdX, Aevo, Drift Protocol, Vertex Protocol, and Hyperliquid, bypass critical consumer protections by operating outside of state and federal regulatory frameworks and expose retail investors to substantial financial losses, predatory leverage, and serious security risks, he said. 

“These platforms are built to lure investors in with promises of easy access and bigger returns,” he said. “What they don’t advertise is that if something goes wrong, investors will be stranded with little to no recourse, while the platforms walk away with the profits. This isn’t innovation, it’s exploitation.”

Tong urged residents to research thoroughly before handing over any money and know what protections are in place if things go wrong. 

State Banking Commissioner Jorge Perez said unregulated offshore crypto platforms posed serious financial and hidden risks to consumers.

“These entities operate outside the safeguards that legitimate regulated financial institutions are required to follow, leaving investors dangerously exposed without protection,” he said. “Decentralized or not, if a platform is evading U.S. oversight, consumers should assume they have no protections when something goes wrong.”