The Securities and Futures Commission (SFC) in Hong Kong recently added Bybit to its list of suspicious virtual asset trading platforms. In a public warning issued on March 14, the SFC expressed concerns about Bybit’s unlicensed operations. The SFC stated that none of the entities within the Bybit group have obtained the necessary license to conduct regulated activities in Hong Kong.
The SFC’s warning specifically mentioned 11 Bybit products as being of concern. These products include futures contracts, inverse futures contracts, options, leveraged tokens, liquidity mining, staking, lending, and wealth management. Among these products are Bybit Dual Asset, a short-term trading tool, and Bybit Shark Fin, a guaranteed earning service, which were singled out as particularly suspicious.
The SFC warned that it may take further regulatory action against Bybit if deemed necessary. The release stated, “The SFC will not hesitate to take enforcement action against unlicensed activities where appropriate.” Offering unlicensed crypto-related products in Hong Kong, such as futures contracts and services, is a criminal offense. It is also illegal to promote these products without authorization.
Investors in Hong Kong who engage with unlicensed services like Bybit face significant risks. If a service ceases operations, collapses, or misappropriates user assets, investors may lose their entire investment. Seeking recourse against overseas services that are not connected to Hong Kong can be challenging. Despite the possibility of SFC enforcement actions providing some level of protection, investors should exercise caution when dealing with unlicensed platforms.
Bybit is currently the third-largest centralized crypto exchange globally, with a 24-hour trading volume exceeding $7 billion as of March 14. However, its unlicensed operations in Hong Kong have raised red flags with the SFC. The addition of Bybit to the list of suspicious virtual asset trading platforms serves as a warning to investors and a reminder of the regulatory risks associated with unlicensed activities in the crypto space.
The SFC’s decision to flag Bybit as a suspicious platform underscores the importance of regulatory compliance in the cryptocurrency industry. Investors should conduct thorough due diligence and only engage with licensed entities to mitigate risks and protect their investments. Bybit’s presence on the SFC’s watchlist serves as a cautionary tale for both industry participants and regulators in the rapidly evolving crypto landscape.