Coinspeaker Coinbase Alerts Users to CFTC Subpoena Linked to Bybit Investigation
Leading American cryptocurrency exchange Coinbase has issued warnings to an undisclosed number of users regarding a subpoena it received from the United States Commodity Futures Trading Commission (CFTC) about Bybit, another digital asset trading platform based in Dubai.
The market watchdog is seeking information about Bybit’s operations for possible violation of federal laws and lack of compliance to know-your-customer (KYC) and anti-money laundering (AML) rules in which Coinbase may be forced to comply and share customer account information with the regulator.
Coinbase Notifies Customers of CFTC Subpoena
Customers who have interacted with Coinbase and Bybit reported receiving emails from Coinbase notifying them of the CFTC subpoena. In the email communication, the Nasdaq-listed exchange said that unless a court reverses the subpoena by November 30, it may be compelled to share the requested data with 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
While Coinbase has not made public statements about the subpoena, insiders familiar with the matter confirmed the exchange is exploring options to challenge the legal order in court.
On the other hand, the company is also reportedly collaborating with the market watchdog to determine the extent of information that may be shared, with efforts to minimize the disclosure of user data in case it chooses to comply with the legal order.
Bybit’s Regulatory Compliance Concerns
Before now, Bybit had stated in its terms of service that it does not offer crypto services in the United States. However, users in the country have reportedly accessed the platform using Virtual Private Networks (VPNs), raising questions about regulatory compliance.
The CFTC is now speculated to be investigating the company’s operations and looking for Coinbase to provide information on user accounts and transaction activities.
The financial watchdog has pursued legal measures against many crypto exchanges in the past for various reasons, including violation of KYC protocols, the operation of illicit digital asset derivatives exchanges, lack of compliance with commodities laws, and the provision of futures trading services without proper registration.
This year alone, the regulator has launched 47 legal cases against different crypto companies such as FTX, Celsius, Voyager Digital CEO Stephen Ehrlich, and Binance, which recently reached a $4.3 billion settlement deal with the regulator alongside the United States Department of Justice (DOJ) and other law enforcement agencies in the country excluding the Securities and Exchange Commission (SEC).
Bybit’s Compliance Efforts and Milestones
Meanwhile, Bybit, which initially allowed users to buy and sell cryptocurrencies on its platform without KYC, said in July 2021 that it would introduce KYC verification for all users in compliance with global AML rules.
In September of the following year, the exchange published KYC instructions on its website for its customers. However, it is unclear when the exchange started complying with the rule.
On November 28, Bybit announced that it had reached a new milestone, surpassing 20 million users, while celebrating its fifth anniversary.
The exchange attributed its rapid growth to continuous innovation, including the introduction of AI-powered trading bots, a sophisticated options market, and a thriving copy-trading community.
Bybit said in the announcement that its commitment to prudent risk management and enhanced AML compliance led to licenses in the UAE, Kazakhstan, and Cyprus.
next
Coinbase Alerts Users to CFTC Subpoena Linked to Bybit Investigation
