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Bybit’s U.S. Restrictions Draw CFTC Scrutiny Amid Coinbase Subpoena

Crypto Bybit, a Dubai-based cryptocurrency exchange, has recently imposed restrictions on its services in the United States. Despite explicitly stating in its terms of service that it does not cater to U.S. customers, reports suggest that access to Bybit is still possible using a virtual private network (VPN). However, these actions have drawn regulatory attention
Bybit, a Dubai-based cryptocurrency exchange, has recently imposed restrictions on its services in the United States. Despite explicitly stating in its terms of service that it does not cater to U.S. customers, reports suggest that access to Bybit is still possible using a virtual private network (VPN). However, these actions have drawn regulatory attention from the United States Commodity Futures Trading Commission (CFTC).

Coinbase, a prominent cryptocurrency exchange, has issued warnings to its users, revealing that it has received a subpoena from the CFTC. The subpoena seeks information regarding Bybit and its cryptocurrency exchange operations. Speculation among Coinbase users indicates that those who have utilized both Coinbase and Bybit may have received this message. According to Coinbase, unless a court reverses the subpoena by November 30, the exchange may be required to disclose information about users’ accounts and transaction activities to the CFTC.

I’ve been off Twitter watching some football. One of my friends sent me this email he received from Coinbase. I do not know how many people are subject to this, what the scope is, etc. However, it looks like Coinbase and ByBit do not mix well together! pic.twitter.com/L3qqDBp2TN

— Suitman (Clinically Insane) (@NotSuitman) November 28, 2023

In response to these developments, Bybit announced a significant milestone, reaching 20 million users, positioning itself as a “top-three cryptocurrency exchange.” The exchange attributes its success to prudent risk management and enhanced Anti-Money Laundering (AML) compliance, leading to licenses in the UAE, Kazakhstan, and Cyprus. Bybit had previously announced the implementation of Know Your Customer (KYC) verification for users in July 2021, with instructions provided to customers in September 2022.

This situation follows Bybit’s decision to exit the United Kingdom market in October due to new Financial Conduct Authority rules. Additionally, the exchange removed two sanctioned Russian banks from its payments list in August, demonstrating a commitment to compliance with international regulations.

The CFTC has positioned itself as a leading enforcement agency in the cryptocurrency space, initiating 47 cases in the digital assets sector during fiscal year 2023. This accounted for 49% of the cases filed, with notable suits against FTX, Celsius, Voyager Digital CEO Stephen Ehrlich, and Binance. The regulatory landscape continues to evolve, prompting cryptocurrency exchanges to adapt their policies and practices to meet compliance standards.

Wasif Shakir

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