Coinbase disclosed that it received a subpoena from the U.S. Commodity Futures Trading Commission (CFTC) regarding information related to the Bybit cryptocurrency exchange, as reported by users. The CFTC is apparently seeking details on Coinbase customers who might also use the Bybit platform. According to reports on November 27, Coinbase indicated that unless the court intervenes to overturn the subpoena by November 30, it might be required to furnish user account information and trading activity to the CFTC.
Although Dubai-based Bybit's terms of service earlier stated that it doesn't offer services within the United States, users could access the platform using a virtual private network (VPN). Despite this claim, Bybit announced an impressive milestone of reaching 20 million users the day after Coinbase's communication. The exchange, positioning itself as a "top three cryptocurrency exchange," highlighted its focus on prudent risk management and enhanced anti-money laundering (AML) compliance, leading to licensing in the UAE, Kazakhstan, and Cyprus.
Bybit had declared its plans to implement Know Your Customer (KYC) verification for users in July 2021, although the exact timeline for this rollout remains unclear. The instructions for KYC procedures were released to its customers in September 2022. Moreover, Bybit made moves in compliance with regulatory requirements by exiting the UK market in September, coinciding with the introduction of new Financial Conduct Authority rules in October. The exchange also removed two sanctioned Russian banks from its payment list in August to comply with global sanctions.
The CFTC has described itself as the foremost enforcement agency in the cryptocurrency space. In their summary of cases for fiscal year 2023, the CFTC noted initiating 47 cases in the digital asset arena, constituting nearly half (49%) of the cases filed. Notable legal actions included lawsuits against entities such as FTX, Celsius, Voyager Digital CEO Stephen Ehrlich, and Binance, marking an active period of regulatory enforcement in the crypto industry.
