Sam Bankman-Fried recently lodged an appeal against his conviction for fraud and his 25-year prison sentence. In November of last year, the disgraced grifter, who previously served as the CEO of FTX, the Titanic of cryptocurrency exchanges, was found guilty of seven counts of fraud and conspiracy to launder money. In March, SBF, as he's colloquially referred to, was sentenced to a lengthy federal prison term. Shortly after, the 32-year-old expressed his intention to challenge the court's decision. FTX, which was once valued at $32 billion, collapsed and declared bankruptcy in late 2022.
Although FTX is gone, other questionable crypto marketplaces still exist, like Bybit.
For the uninitiated, Bybit, headquartered in Dubai, is one of the biggest cryptocurrency exchanges in the world.
"The achievement of over 20 million registered users," according to its website, "is a testament to the trust and confidence the global trading community places in Bybit."
Its CEO, Ben Zhou, boldly said that "Bybit has proved itself as a safe, highly effective crypto hub."
Has it, though?
If a recent report by BrokerChooser, a popular broker comparison website, is to be believed, then the answer is most definitely no. When answering the question, "Is Bybit safe or a scam?" the analysts lean more toward the latter than the former.
Read more: Best Cryptocurrency to Invest In
To understand why, one must first understand that cryptocurrencies lack any physical backing. As their value is primarily influenced by market demand, they function within a mostly unregulated environment. Many crypto exchanges are a reflection of the Wild Wild West environment in which they operate. Coinbase, the most powerful exchange in the world, now finds itself in big trouble.
Read more
- How Will Israel Retaliate?
- A Sharp Reminder From Wisconsin That All Politics Is Local
- How Military Technology Could Solve America's Housing Shortage
In June 2023, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, accusing it of violating securities laws and operating as an unregistered broker and exchange. The regulatory body also requested that Coinbase be permanently prohibited from engaging in such activities going forward. In March of this year, around the very same time SBF was being sentenced, Coinbase suffered a significant setback when a U.S. district judge ruled that the SEC's allegations were credible and could proceed to trial with a jury.
Similarly, the Securities and Futures Commission (SFC) of Hong Kong recently issued a warning to investors regarding Bybit and its various offerings. The lack of licensing from Bybit has been emphasized not just by BrokerChooser analysts, but also by the SFC. In short, investors should be extremely cautious when dealing with the company. In particular, the SFC has raised red flags on multiple products provided by Bybit, such as futures contracts, options, leveraged tokens, and other cryptocurrency-related services. These products have allegedly been promoted to investors in Hong Kong without the necessary authorization, potentially exposing them to significant financial risks—and they are being promoted in other regions and countries, as well.
Read more: The Best Types of Investments to Boost Your Net Worth
Remember, Bybit has at least 20 million registered users. In other words, as many as 1 in 20 crypto users could be availing of its questionable services.
As someone who has been heavily involved in the crypto space for years, writing for major outlets like CoinDesk and Cointelegraph, I have had my suspicions about Bybit for quite some time. The BrokerChooser report simply reinforced them. Although being regulated alone does not guarantee the safety of one's funds, a regulated company does carry at least a sliver of legitimacy. Bybit is not regulated—at least not by any credible authority with high standards.
As Laura Laczó, an analyst with BrokerChooser, told Newsweek, "Bybit's red flags are reminiscent of the FTX collapse."
She said that "BrokerChooser's crypto exchange safety index ranks Bybit among the riskiest exchanges regarding regulation, market fairness, and transparency." Laczó said their "data indicates Bybit is among the top 10 most searched 'scam brokers,' suggesting significant user concern."
In 2022, the aforementioned Zhou solemnly declared that he and his team were actively engaged in ensuring compliance with regulatory authorities in order to demonstrate that their clients' funds were safe and secure. Zhou emphasized that this was crucial, as transparency regarding user funds was (and always will be) vital if an exchange wishes to be trusted. Almost two years on, there is no transparency, and I trust Bybit even less today than I did in 2022.
That's because Bybit's market dominance stands in stark contrast to the increasing regulatory and public concern, indicating a significant story that has garnered insufficient levels of attention. A storm appears to be brewing, and many crypto enthusiasts could end up losing a lot of money. In fairness to BrokerChooser, their analysts have been sounding the alarm on Bybit for a few years. It's time we listened, because, like FTX, Bybit appears to be a bubble about to burst—and if it does, millions of people could suffer.
John Mac Ghlionn writes about social issues, technology, and the impact of media manipulation. Follow him @ghlionn.
The views expressed in this article are the writer's own.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
");jQuery(this).remove()})jQuery('.start-slider').owlCarousel({loop:!1,margin:10,nav:!0,items:1}).on('changed.owl.carousel',function(event){var currentItem=event.item.index;var totalItems=event.item.count;if(currentItem===0){jQuery('.owl-prev').addClass('disabled')}else{jQuery('.owl-prev').removeClass('disabled')}if(currentItem===totalItems-1){jQuery('.owl-next').addClass('disabled')}else{jQuery('.owl-next').removeClass('disabled')}})}})})
