Regulatory & Customer Complaint Conundrum - Is Bybit in Trouble?

Four months ago, a freshly made company promo video was released by Bybit on LinkedIn. In the video, a young trader tapped on his Bybit app on an ascending elevator. The scene is jumping back and forth between the Bybit logo and the flickering and increasing floor number in the elevator screen, implying something that is self-evident. At last, the video ends with a slogan, Bybit: It's Time to Level Up.

Ironically, the top one comment from this LinkedIn post was from a user named Harsh Kumar:

"BYBIT BAN(S) MY 1700$ JUST USING 80$ BONUS USE.

Please unban my account. My all crypto saving lost...

Please sir check my account..."

Now let's travel back a few years, and it is easy to notice that Bybit seems to be trapped in a conundrum a long time ago.

A little something about Bybit

Founded in 2018, Bybit is a Singapore-based online cryptocurrency trading platform, offering buys and sells of assorted cryptocurrencies with derivatives and spot trading.

According to Coinmarketcap.com (up until April 20 2022), Bybit currently ranks 16th among all crypto exchanges with a last-24-hour trading volume up to $362.1 million. That is a 29.28% decline, only better than Gemini (-33.18%), Huobi (-31.02%), and Bitfinex (-29.46%) among all top 16.

The regulatory conundrum for Bybit

Back in March 2021, Fazzaco reported that Bybit decided to shut down its UK operations due to FCA's ban of crypto derivatives​. Now that more than a year has passed, Bybit still remains unavailable to UK retail traders according to some users.

In June 2021, Japan's FSA, the country's financial regulator, issued a warning to Hiraku, a popular Japanese YouTuber with 4.4 million followers, for promoting Bybit to Japanese residents without permission​. According to FSA, Bybit was never authorized to advertise on any media, including YouTube. Earlier that month, the regulator had already warned Bybit for providing crypto service in Japan without registration.

In August 2021, Bybit was once again faced with a regulatory crisis in Spain. CNMV, the country's regulator of securities markets, issued warnings against a number of unlicensed brokers and crypto firms targeting Spanish traders, and Bybit was one of the targets of this crackdown.

According to CNMV, Bybit failed to register in the corresponding registry of the Commission, and therefore are not authorized to provide investment services or other activities subject to the CNMV's supervision.

Although Bybit claims to have global access, it is actually limited or unavailable to investors in countries such as the United States, Canada, Singapore, Switzerland and Mainland China.

The Customer Complaint Conundrum for Bybit

Back in early 2021, the time when Bitcoin skyrocketed and everybody was super optimistic about the crypto market, some traders had file complaints against Bybit: I know the market is bullish, and I thought I'd make money. But I got into Bybit and lost my six grand. Their operations are simply baffling. I had no idea where to place stop loss, not to mention all kinds of hidden fees.

Bybit's mobile app design is showing flaws too. A user commented the following in its App Store page, "every now and then I was promoted to update this app by an annoying pop-up that's difficult to close on your mobile device. I installed the app update, yet the annoying pop-up still persists."

What's more, "all the controls are not on the screen you want them to be so that you can execute quick trades," "earlier versions of the app were much better and user-friendly."

Moreover, Bybit was accused of false marketing too. In March 2021, a user commented "if you go 25x leverage, the underlying can go down 4% before you should be liquidated. But Bybit has a 2% safety buffer, so they will liquidate you once the underlying drops 2%, and keepo the remaining difference, at the price they liquidate you at."

Conclusion

Cryptocurrency is shifting from a speculative investment to a balanced portfolio. But countries around the world are still divided in terms of regulation. The legality and trading of cryptocurrencies are subject to different regulations in different jurisdictions, and they are thus classified differently.

Binance, the biggest crypto exchange in the world, was faced with similar regulatory conundrum last year, makes the best example that regulatory crisis like Binance and Bybit faced will continue to happen on other crypto exchanges before a globally united regulatory framework is formed.

As for the customer complaints, hopefully they could be a reminder for all online trading platforms including Bybit that if any company does not seek changes in face of complaints, they will eventually backfire.