Ben found

{-# LANGUAGE PolyKinds, TypeFamilies, MagicHash, DataKinds, TypeInType, RankNTypes #-}

import GHC.Exts
import GHC.Types

type family Boxed (a :: k) :: *
type instance Boxed Char# = Char
type instance Boxed Char  = Char

class BoxIt (a :: TYPE lev) where
    boxed :: a -> Boxed a

instance BoxIt Char# where boxed x = C# x
instance BoxIt Char  where boxed = id

hello :: forall (lev :: Levity). forall (a :: TYPE lev). BoxIt a => a -> Boxed a
hello x = boxed x
{-# NOINLINE hello #-}

main :: IO ()
main = do
    print $ boxed 'c'#
    print $ boxed 'c'
    print $ hello 'c'
    print $ hello 'c'#

This is plainly wrong because we have a polymorphic function boxed that is being passed both boxed and unboxed arguments.

You do get a Lint error with -dcore-lint.

But the original problem is with the type signature for boxed. We should never have a levity-polymorphic type to the left of an arrow. To the right yes, but to the left no. I suppose we could check that in TcValidity.

See also #11471 (closed)