LayerZero CEO Bryan Pellegrino Calls Out Alleged $24,000 Wash Trading on Hyperlane, Sparking Reactions from Robinson Burkey and Zach Rynes

LayerZero CEO Bryan Pellegrino posted a response on X highlighting suspicious blockchain transactions. He pointed to recent data linked to Hyperlane, noting repeated $24,000 USDT transfers in a ping-pong pattern. Pellegrino labeled this behavior Hyperlane wash trading because it appeared automated and orchestrated by the same addresses. Each transfer occurred every thirty seconds, moving funds back and forth repeatedly. The pattern hinted at artificial volume inflation, raising questions about reported metrics. This set off a debate over the legitimacy of transactions in a series of June 5 X posts from various industry figures.

Repeated Transfers Raise Questions About Wash Trading

An image shared by Pellegrino displayed multiple transaction logs with identical amounts and methods. It showed entries labeled “Process” followed by “Transfer Remote,” repeating across blocks. All movements involved the same small group of addresses, alternating roles in each transaction. This uniformity suggested a scripted operation rather than natural user activity. The logs clearly recorded $24,000 USDT transfers each time without variation. Analysts believed this indicated Hyperlane wash trading to inflate volume numbers. Observers noted that authentic usage would likely show diverse amounts and participants.

Image 1, provided by Pellegrino, repeated transactions on Hyperlane, June 5 2025

Prior to Pellegrino’s critique, Hyperlane had promoted its rapid expansion, highlighting stablecoin growth. Their chart indicated recent monthly stablecoin volume exceeding $250 million. They also claimed that more than $1 billion had been bridged in total. Yet the context of repeated $24,000 transfers casts doubt on these figures. Observers questioned whether genuine adoption fueled growth or if Hyperlane wash trading skewed data. Such practices drew attention to potential market data manipulation in the blockchain sector. Skeptics argued that figures alone did not prove sustainable usage.

Community Questions Whether Incentives Encourage Wash Trading

Hyperlane responded by distancing itself from the flagged addresses, claiming no direct connection. They suggested the user might have sought rewards through Expansion Rewards incentives. These incentive programs distribute HYPER tokens to participants based on activity levels. Pellegrino challenged the design of these rewards, questioning if they primarily benefited actors using relayers in revenue-sharing setups. He implied that such a model could encourage Hyperlane wash trading behavior unintentionally. The debate raised concerns about how incentive structures can distort reported metrics and user engagement.

Community members weighed in, saying protocols rewarding activity volume could unintentionally prompt wash trading. They argued that focusing on transaction count rather than fees paid might drive users to create spurious trades. One observer warned that such metrics could mask real performance with market data manipulation tactics. Another participant pointed to the importance of distinguishing organic growth from incentivized spikes. In turn, some suggested that rewarding volume rather than genuine usage risks undermining trust. The conversation highlighted how industry incentives shape public user behavior.

Critics Resurface LayerZero Wash Trading Allegations

Critics reminded that LayerZero itself had been linked to similar practices before. Chainlink’s liaison Zach Rynes cited early 2023 data showing sudden spikes in token movement. He claimed that much of this volume reflected LayerZero wash trading tied to ZRO airdrop farming. A transaction volume graph displayed enormous peaks followed by quick drops, suggesting temporary surges. Such examples illustrate that wash trading issues could affect multiple protocols. Observers argued that any protocol’s metrics should be scrutinized carefully to avoid misleading narratives.

Robinson Burkey of Wormhole Foundation shared data from May 13, highlighting further concerns. He noted that nearly $555.7 million of LayerZero’s reported $590.38 million daily volume came from only a few addresses. These addresses ran repetitive transactions moving funds back and forth. Burkey questioned how to differentiate between real user activity and fabricated volume. He challenged the notion that protocol growth was genuine when such patterns were evident. His analysis underscored ongoing issues with cross-chain ecosystems.

Pellegrino Defends Cross-Chain Transfers as Arbitrage, Not Wash Trading

In response, Pellegrino maintained that many flagged transfers were legitimate arbitrage operations across chains. He cited instances of USDT moving through various protocols and exchanges for real trading opportunities. He argued that these transactions did not constitute wash trading practices. Despite these claims, both sides accused each other of cherry picking evidence and narrative control. The debate highlighted the difficulty of verifying authentic usage versus manipulated volumes. Industry participants now face challenges in trusting reported cross-chain metrics. Clear standards for measuring real engagement remain a critical need.