Hidden Road, a prime brokerage firm 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. Bloomberg reports that Bybit is now undergoing a comprehensive compliance review to address these concerns.
Sources familiar with the matter have revealed that Hidden Road, the prime brokerage firm backed by Citadel Securities, has decided to stop offering clients access to the cryptocurrency trading platform Bybit. This decision was communicated to clients a few weeks ago, although the exact details of the disagreement between Hidden Road and Bybit remain unclear.
In response to this development, Bybit has initiated a “comprehensive compliance review” of its prime brokerage business. Regulatory scrutiny of cryptocurrency exchanges has increased, particularly following Binance and CZ’s agreement with the US Department of Justice regarding violations of AML and sanctions laws.
After Binance’s $4.3 billion settlement with US authorities last year, the cryptocurrency exchange requested prime brokers, including Hidden Road and FalconX, to implement more rigorous checks to prevent US investors from using the platform. A spokesperson from Bybit stated that while the issue has only affected some users, it has caused dissatisfaction among clients who prefer to access cryptocurrencies through trusted companies or brokers.
Last month, Bloomberg reported that Hidden Road was planning to raise $120 million in a Series B equity round. The prime brokerage firm provides services for the foreign exchange and digital asset markets.
Amid recent speculation of a potential hack or insolvency at Bybit, CEO Ben Zhou addressed these claims on May 23. Zhou assured users of Bybit’s financial stability and robust security measures, dismissing the rumors as baseless. He highlighted Bybit’s recent update of its Proof of Reserves (PoR) and the verification of over $11 billion in assets by Nansen data.
In response to the escalating rumors, Zhou took to Twitter to directly address the situation, reiterating Bybit’s financial health and safety measures. He emphasized that none of the claims had any factual basis.
Bybit has also faced regulatory challenges in Europe, particularly in France, where it has been blacklisted by the Autorité des Marchés Financiers (AMF) for operating without proper authorization. Despite its global prominence and 20 million registered users, Bybit has received warnings from the AMF and Hong Kong’s Securities and Futures Commission for non-compliance with local regulations.
