News - Fourth largest crypto exchange in the crosshairs: will Bybit be attacked soon?

By Mike Hesp

Fourth largest crypto exchange in the crosshairs: will Bybit be attacked soon?

Laws and regulations

First FTX, then Binance, now Bybit? The American justice system is sending the fourth-largest crypto exchange a subpoena. Presumably, it is preparing a lawsuit.

The U.S. Trade Commission CFTC has sent a subpoena to Bybit, the third-largest crypto exchange outside the US.

Coinbase, the largest crypto exchange in the US, has informed its users of this.

The suspicion: the CFTC is trying to find out if Bybit is also operating illegally in the US.

It therefore also requested account and transaction information from Coinbase.

The idea behind this: If customers of Bybit have transferred their money to Coinbase, they are probably U.S. citizens.

These allegations - ignoring U.S. laws, providing illegal services to U.S. citizens - were also the starting point for the lawsuit against Binance.

Bybit could thus be the next exchange to be targeted by the U.S. Justice Department. This is currently moving remarkably fast: SBF was convicted in November 2023, followed a few weeks later by the strike against Binance.

However, the CFTC warned the industry that this was just the beginning.

Commissioner Caroline Pham: "It should be clear that the CFTC will not stop in its pursuit of non-U.S. companies."

The CFTC sued crypto exchange Binance in March 2023, but the case was recently dismissed in favor of a settlement.

The result: the founder must resign, the crypto exchange must provide all its data and pay a $4.3 billion fine.

Bybit is the third-largest crypto exchange outside the US. About two billion dollars is traded daily.

The exchange was founded in 2018 by a Chinese entrepreneur, Ben Zhou. Meaningful money laundering controls were only introduced at a late stage. Know-Your-Customer (KYC) has only been in place since May 2023.

Authorities in the United Kingdom and Japan have already fired stern warnings at Bybit and demanded compliance with applicable laws.

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