Bybit Temporarily Halts U.S. Dollar Deposits and Withdrawals
Deposits in US dollars are ‘no longer available,’ and Withdrawals are temporarily suspended
Bybit has suspended US dollar deposits via bank transfer due to a partner-caused service outage, according to the Dubai-based crypto exchange. Bybit announced on its website that US dollar wire transfers, including SWIFT payments, have been temporarily suspended, and that withdrawals will be suspended on March 10. Customers can buy and sell cryptocurrency using alternative methods.
The crypto exchange did not identify the partner who was involved in the suspension of bank transfers. Bybit is one of the companies exposed to Genesis Global Trading, a cryptocurrency lender that filed for Chapter 11 bankruptcy earlier this week. Bybit maintains that user funds are “safe and secure,” but recommends that clients withdraw USD “as soon as possible” to avoid potential inconveniences. Bybit’s CEO, Ben Zhou, stated that its investment arm, Mirana Asset Management, has a US$150 million exposure to Genesis. According to Zhou, US$120 million of the funds were collateralized and liquidated. Furthermore, he stressed that all customer assets are kept in separate accounts and that Bybit’s earn products do not use Mirana.
Binance, the world’s largest cryptocurrency exchange, announced last month that it would temporarily suspend US dollar bank account deposits and withdrawals but would restore the service as soon as possible. Bybit’s decision coincides with the collapse of the crypto payments network operated by the bankrupt U.S. lender Silvergate Capital. A variety of exchanges and investors used the 24-hour, real-time system, but it was shut down on Friday, March 3 due to a “risk-based decision.” The network was an important entry and exit point for USD in the U.S. crypto market. Following FTX’s catastrophic collapse in November 2022, regulatory constraints and market outflows are putting pressure on US institutions to reduce their exposure to cryptocurrency assets.
Lawmakers have expressed concern about the lack of regulatory oversight for cryptocurrencies, claiming that it opens the door to fraud, money laundering, and other criminal activities. There has also been discussion about whether cryptocurrencies should be classified as securities or commodities, which would subject them to a variety of regulatory requirements. Despite these reservations, some lawmakers and regulators have recognized cryptocurrencies’ potential benefits, such as their ability to facilitate faster and cheaper cross-border transactions, promote financial inclusion, and serve as an alternative store of value. Policymakers are grappling with how to balance the potential benefits and risks of this new asset class as the cryptocurrency market evolves.
