An offshore perps venue hired a former Solicitor General to fight CME

The Hyperliquid Policy Center asked a federal judge on September 9 to throw out CME Group's lawsuit against the CFTC, and it asked in the voice of Elizabeth Prelogar, who was Solicitor General of the United States from 2021 through 2025.

Read that sentence twice.

The advocacy arm of a perpetuals venue that no American can legally trade on is now in the U.S. District Court for the District of Columbia, represented by the lawyer who used to argue the federal government's cases at the Supreme Court, defending the federal government's regulator against the largest derivatives exchange in the world.

The underlying fight is about a contract with no expiry date. A perpetual tracks spot through a small periodic payment between longs and shorts instead of converging at expiration, which is why it has eaten crypto derivatives volume and why CME, which has chosen not to list one, sued the CFTC in June for letting other venues do so. In May the CFTC issued an order allowing Kalshi to list a bitcoin perpetual and confirmed that any U.S. derivatives exchange could follow (CME included) without prior approval. Last month it cleared the first perpetuals for Kalshi and Coinbase.

HPC's brief carries the number that makes the case for it. Nearly $90 trillion of notional perpetuals traded globally last year, referencing digital assets, oil and metals, and not one of those contracts sat on a U.S.-regulated exchange an American could reach. Foreign venues took the fees. Foreign treasuries took the tax. If you have ever wondered why Washington suddenly cares about a Cayman order book, that is the paragraph.

"Once a titan of innovation, CME now advances a novel theory of standing under which an incumbent exchange is injured whenever its regulator permits a new product that it chooses not to offer," Prelogar wrote. "If CME prevails, every product that the CFTC approves will invite litigation from incumbents who prefer the status quo, and the pace of progress in the U.S. futures markets will slow to a crawl."

CME's chief executive Terrence Duffy has called perpetual futures a "disaster waiting to happen" and argued they should be classified as swaps under Dodd-Frank. Its complaint says the products compete directly with its own and injure it. Which is, on the face of it, an odd thing to say about a product you have declined to sell.

Our read is that CME is going to lose this on standing, and that the loss will matter more than the product. Competitor standing is not nothing in administrative law (airlines and hospitals have won on it), but the usual shape of it is an agency handing a rival an advantage the plaintiff cannot get. Here the same order opens the same door to CME, which has said no thanks (in public, repeatedly, at some volume). The CFTC moved to dismiss on September 2 and called the suit much ado about nothing. We would expect a dismissal on Article III grounds rather than a ruling on what a perpetual is, and we would expect it before the end of the first quarter of 2027. A judge who reaches the merits instead, and treats a funding rate as a swap feature, would tell us we read the docket wrong.

Who is worse off? CME, obviously, and not mainly in court. The company spent this year arguing that a product is dangerous while its regulator was writing it into the rulebook, and the brief it now faces was written by a lawyer whose name on a filing is itself an argument.

There is a second thing happening underneath, and it is stranger than the lawsuit.

On August 19, at a White House press briefing, President Trump named Hyperliquid. Jake Chervinsky, who runs HPC, told The Rollup on September 7 that his team had no advance notice of the mention and reads it as a sign the CFTC is seriously studying a compliant U.S. route for the venue.

Wu Blockchain@WuBlockchain

Trump Publicly Names Hyperliquid as CFTC Studies Its Path to U.S. Compliance

On September 7, 2026, Jake Chervinsky @jchervinsky , CEO of the Hyperliquid Policy Center, said in an interview with The Rollup @therollupco that his team had no advance knowledge that Trump would mention Hyperliquid during a White House press briefing on August 19. Chervinsky believes this at least indicates that the CFTC is seriously examining a path for Hyperliquid to enter the U.S. market, although significant regulatory details still need to be resolved before anything can be implemented. Meanwhile, U.S. regulators are also working on changes to the regulatory framework for perpetual contracts and on-chain markets.

And Americans are already long the thing. Bloomberg's James Seyffart counted roughly $350 million of cumulative inflows into the three U.S. Hyperliquid ETFs since they launched in the spring, with 13F filings now showing who holds them (he published the holder list on September 4). So the token sits in brokerage accounts, the exchange does not, and the entity arguing the CFTC's side in federal court is funded by the ecosystem that gap belongs to. You can own the equity of the thing you are not allowed to use.

James Seyffart@JSeyff

Here's what cumulative flows look like for the US Hyperliquid ETFs since launch this spring: ~$350 million of inflows. $BHYP $HYPG $THYP

Full report: t.co/UegvBVnwsg t.co/0AVqHGPgAp

The date to watch is the ruling on the motion to dismiss. Everything else here is prologue.