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Bybit flagged by Hong Kong regulator as suspicious crypto platform

The alert released specifies 11 unlicensed investment products.

Bybit flagged by Hong Kong regulator as suspicious crypto platform

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Bybit has been marked as a “suspicious” crypto trading platform by Hong Kong’s financial watchdog, in a bid to pursue tighter regulation over its jurisdiction.

The Securities and Futures Commission (SFC) included Bybit in its updated alert list, singling out 11 of the platform’s investment products as questionable. These products range from futures contracts to wealth management services, all of which the SFC states are unlicensed in Hong Kong.

Bybit’s regulatory standing varies across different jurisdictions. In Hong Kong, the Securities and Futures Commission (SFC) has warned the public that Bybit is unlicensed, placing it on the list of suspicious cryptocurrency exchanges and products. For the same set of primary reasons, Bybit is not legal in the USA due to strict regulatory laws, but individuals can access it using a VPN to bypass restrictions. Despite these, media statements from Bybit claim that it actively cooperates with regulators globally, and follows industry best practices to ensure compliance with regulations.

The SFC’s concerns extend to the offerings being available to investors within the region, emphasizing that Bybit’s group entities hold no SFC license for regulated activities in Hong Kong. Bybit, however, maintains that its products comply with regional regulations and are not offered in the Hong Kong market.

“The SFC is concerned that these products have also been offered to Hong Kong investors and wishes to make it clear that no entity in the Bybit group is licensed by or registered with the SFC to conduct any ‘regulated activity’ in Hong Kong,” the regulator said in a statement.

The regulator also affirmed its stance on enforcement actions, claiming that it “will not hesitate” to take action against “unlicensed activities where appropriate.”

The issue arises amid Bybit’s ongoing license application process. Spark Fintech, a Bybit entity in Hong Kong, applied for a virtual asset trading platform license with the SFC in January. This application is under review, and the outcome will determine the firm’s ability to operate legally within the jurisdiction.

Bybit operates globally through, run by a Seychelles-based company, separate from the Hong Kong-specific managed by Spark Fintech. The distinction between the two entities is crucial as the SFC’s scrutiny intensifies. The exchange recently announced support for Optimism, Base, Arbitrum, and Mantle to prepare for an upgrade, although Bybit only said it would temporarily halt withdrawals on the said networks. Hence, it is unclear whether this pause is related to the Dencun upgrade.

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