Bybit CEO Denies Hack and Insolvency Rumors

This week, the crypto community was alarmed by rumors that a major exchange was facing insolvency issues. Amid the growing concern, users pinpointed Bybit as the exchange in trouble.

On Wednesday, Bybit CEO Ben Zhou addressed these rumors on X, denying any hack or insolvency problems and assuring investors that the exchange was operating normally. This came after reports on Tuesday suggested potential insolvency, leading to fears of another FTX-like collapse. The rumors started when Arkham Intelligence’s Proof-of-Reserves (PoR) graph showed a sudden drop from $11 billion to $6 billion.

An X user quickly clarified that the drop was due to a bug in Arkham’s graph, caused by a specific wallet not displaying over $4 billion in funds. When checked individually, all assets were present. The community responded with humor, sharing memes and references to the FTX collapse while awaiting further clarification. One user humorously compared crypto prop desks to gossiping teenagers, cautioning against becoming collateral damage in a self-fulfilling prophecy.

Other users urged the community to verify news before spreading fear, uncertainty, and doubt (FUD). They recommended using different platforms to check Bybit’s PoR and related information. On May 23, Ben Zhou acknowledged the concerns and confirmed that Bybit had neither been hacked nor was insolvent. He shared a PoR snapshot from May 8 and linked it to Nansen’s dashboard, showing Bybit’s $11 billion in assets. Charts confirmed that Bybit’s asset value remained above $10 billion, disproving the rumors.

The recent FUD coincides with increasing regulatory scrutiny of Bybit. Last week, French authorities criticized the exchange for operating without a license in France. The Autorité des Marchés Financiers (AMF) reminded the public that Bybit had been blacklisted in the country since 2022. The AMF stated its right to block Bybit’s website and advised users to secure their assets before they become inaccessible.

In March, the Hong Kong Securities and Futures Commission (SFC) labeled Bybit as a “suspicious” platform. The SFC’s warning was part of broader efforts to crack down on unregistered platforms in Hong Kong. The regulator listed 11 products offered by Bybit as “suspicious” and warned users about the risks of investing in an unregulated platform.

Despite the scare, Bybit’s CEO Ben Zhou has reassured investors that the exchange is stable and fully operational. The initial drop in Arkham Intelligence’s PoR graph, which sparked the rumors, was due to a technical glitch rather than a genuine loss of funds. Zhou’s prompt response and the verification from multiple sources, including Nansen’s dashboard, have helped to calm the community’s fears.

However, the incident highlights the ongoing regulatory challenges faced by crypto exchanges like Bybit. The scrutiny from French and Hong Kong authorities underscores the importance of compliance in maintaining investor confidence. As the crypto industry continues to grow, exchanges will need to navigate these regulatory landscapes carefully to avoid similar issues in the future.

In summary, while the rumors of Bybit’s insolvency have been debunked, the exchange’s regulatory troubles in France and Hong Kong remain a significant concern. Investors are advised to stay informed and cautious, ensuring they rely on verified information before making decisions.