Hidden Road Halts Client Access to Bybit Over KYC and AML Disagreements- Bloomberg

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Hidden Road, a prime brokerage backed by Citadel Securities, has suspended client access to the cryptocurrency trading platform Bybit due to disagreements over know-your-customer (KYC) and anti-money laundering (AML) requirements.

According to Bloomberg, Bybit is undergoing a comprehensive compliance review to address these concerns.

Hidden Road Disagreement on Bybit’s KYC And AML

Prime brokerage Hidden Road will stop offering clients access to crypto exchange Bybit after the two firms disagreed on KYC and AML requirements https://t.co/oPD4umtcmx

— Bloomberg Asia (@BloombergAsia) May 29, 2024

According to sources familiar with the matter, Citadel Securities-backed prime brokerage firm Hidden Road has stopped offering clients access to the cryptocurrency trading platform Bybit.

According to a Bloomberg report, Hidden Road informed clients about the decision to prevent access to Bybit a few weeks ago. The exact disagreement between the two companies remains unclear.

In response, Bybit has initiated a “comprehensive compliance review” of its prime brokerage business. Regulators have tightened scrutiny over crypto exchanges, especially following Binance and CZ’s agreement with the US Department of Justice over violations of AML and sanctions laws.

After Binance’s historic $4.3 billion settlement with US authorities last year, the crypto exchange asked prime brokers, including Hidden Road and FalconX, to run more stringent checks to keep US investors off the exchange. A Bybit spokesperson stated,

“Bybit will not comment on specific inquiries related to counterparties at this time. However, the company is committed to transparency and will provide further updates as the review progresses.”

While the issue has only impacted some users, it has caused dissatisfaction among clients who preferred accessing crypto through trusted companies or brokers.

Last month, Bloomberg also reported that Hidden Road wanted to raise $120 million in a Series B equity round. Hidden Road provides prime brokerage services for foreign exchange and digital asset markets.

Bybit CEO Denies Rumors of Hack

Recent speculations about Bybit’s potential hack or insolvency raised concerns within the crypto community, prompting CEO Ben Zhou to address these claims on May 23. Amid social media rumours questioning the exchange’s solvency and security, Zhou assured users of Bybit’s financial stability and robust security measures.

He emphasized that Bybit remains solvent and secure, referencing the recent update of their Proof of Reserves (PoR) and showcasing over $11 billion in assets, as verified by Nansen data.

In response to the escalating rumours, Zhou took to Twitter to address the situation directly, emphasizing that none of the claims had any factual basis. He highlighted Bybit’s updated PoR and reassured users and the wider crypto community about the platform’s safety and financial health.

Meanwhile, Bybit has faced regulatory challenges in Europe, specifically being blacklisted in France by the Autorité des Marchés Financiers (AMF) for operating without proper authorization. Despite its global prominence and 20 million registered users, Bybit was warned against by the AMF and Hong Kong’s Securities and Futures Commission for lacking compliance with local regulations.

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