Hidden Road has ceased offering access to Bybit reportedly due to disagreements over Bybit’s KYC and AML measures.
Sources familiar with the matter report that Citadel Securities-sponsored premier brokerage business Hidden Road has stopped offering its clients access to Bybit, the third-largest cryptocurrency exchange.
This action led to disagreements between the two parties over Bybit’s requirements for know-your-customer and anti-money laundering measures.
Bybit Users Face Major Blow in Dispute With Hidden Road
According to a report by Bloomberg, Hidden Road informed its customers about the move to restrict access to Bybit a few weeks ago. The exact nature of the disagreement between the two companies about the criteria for know-your-customer and anti-money laundering that Bybit has in place is not yet evident.
The “comprehensive compliance review” of Bybit’s prime brokerage business has sparked an investigation. After Binance and CZ reached an agreement with the United States Department of Justice regarding violations of anti-money laundering and sanctions laws, regulators have increased their surveillance of cryptocurrency exchanges.
Following Binance’s record $4.3 billion deal with US authorities last year, the cryptocurrency exchange requested that prime brokers such as Hidden Road and FalconX conduct more strict inspections in order to prevent US investors from using the cryptocurrency exchange.
Bybit will not comment on specific inquiries related to counterparties at this time. However, a Bybit spokeswoman released a statement stating that the firm is committed to transparency and will provide further updates as the study progresses.
Despite the fact that the problem under discussion only affected a small number of users, it has resulted in unhappiness among customers because they would rather obtain cryptocurrency through reputable organizations or brokers.
Bybit’s Market Share Rise Amid Binance’s Struggles
The United States Securities and Exchange Commission (SEC) and other US officials have accused Binance of enabling US-based customers to trade on the international exchange through offshore businesses without implementing the necessary controls required by US law.
Litigation and investigations against Binance, Binance.US, and CZ have increased the market share of other cryptocurrency exchanges.
During this bull market, OKX and Bybit saw a significant increase in cryptocurrency trading, which coincided with an increase in demand.
In the face of tight US regulations, cryptocurrency companies and exchanges have even transferred their operations elsewhere.