ByBit Exchange is US Regulators’ Next Target; CFTC Subpoenas Coinbase

YEREVAN (CoinChapter.com) — ByBit, US regulators won’t see eye-to-eye in the coming months. The fourth-largest cryptocurrency exchange by volume has become the next target of the US’s crypto crackdown. Notably, the Commodity Futures Trading Commission (CFTC) is now fishing for evidence against ByBit from rival crypto exchange Coinbase (COIN).

CFTC Subpoenas Coinbase

Interestingly, several users of Coinbase reported receiving an alarming email from the firm. According to screenshots widely circulating on social media, authorities have subpoenaed America’s leading crypto exchange. 

However, Coinbase is not the target of the US Futures Trading Commission. As the email title indicates, it has something to do with the regulator’s ongoing investigation into ByBit and its founder and CEO, Ben Zhou.

“We write to inform you that Coinbase has been served with a subpoena in the above-referenced matter seeking information related to your account and account transaction activity,”  

 the email reads.

Coinbase indicates that no immediate action is required from users. However, it informs them that Coinbase may comply with the subpoena by providing information to the CFTC. To stop this, users must file a legal objection to squash it before Nov. 30, 2023.

ByBit vs. US Regulators 

ByBit, unlike Coinbase, does not have the necessary regulatory approval to operate in the US. Hence, according to regulatory laws, they are not allowed to serve American citizens either. 

The CFTC hopes to capture the ByBit CEO Ben Zhou and his executives for violating this rule. They have approached Coinbase (COIN) to make their case and collect evidence for their accusations. 

“This is a clever way of determining that ByBit had US users (previous attempts were less sophisticated), which can then lead to CFTC action similar to what Binance & BitMEX went through. I imagine ByBit will end up in relatively more trouble given they tolerated it longer,”

 one user wrote on X. 

Investors are now drawing parallels between the upcoming action against ByBit and the recent crackdown on Binance. 

Meanwhile, some say deciding to provide user data to the Commodity Futures Trading Commission (CFTC) could raise questions about Coinbase’s ethics. 

“If Brian Armstrong [CEO of CoinBase] agreed to this its a travesty and he should be held accountable. Your information is private,” 

one crypto analyst wrote. 

US Regulators have intensified their crackdown on the crypto sector. Now, they are going after ByBit. Ben Zhou could be in trouble if the Commodity Futures Trading Commission succeeds in gathering evidence against the exchange.