Rumors Spark Fear

This week, rumors of a crypto exchange's insolvency began circulating in private chats, causing widespread panic.

Amid the uncertainty, the community identified Bybit as the exchange allegedly facing issues. These speculations led to concerns of a potential FTX-like collapse.

Bybit's Response

Bybit's CEO Ben Zhou took to X on Wednesday to refute the rumors. He reassured investors that the exchange was operating normally and had not been hacked.

Zhou shared the exchange's Proof of Reserves (PoR) snapshot from May 8 and linked Nansen's dashboard, which displayed Bybit's $11 billion in assets.

Misleading Data

The rumors initially gained traction when Arkham Intelligence's PoR graph for Bybit suddenly dropped from $11 billion to $6 billion.

However, an X user clarified that this was due to a bug in the graph caused by a specific wallet not showing over $4 billion in assets. Once checked individually, all assets appeared intact.

Community Reaction

The crypto community humorized the incident, sharing memes and references to the FTX collapse. Some users urged the community to verify news before spreading FUD (Fear, Uncertainty, and Doubt).

"The prop desks in crypto are worse than teenage girls when it comes to gossip, and I don't want to be collateral damage in a self-fulfilling prophecy," one user joked.

Regulatory Scrutiny

Simultaneously, Bybit faces regulatory challenges. France's financial authorities (AMF) accused Bybit of operating without a license.

The AMF warned users against using the exchange in 2022 and recommended that they protect their assets. Similarly, the Hong Kong Securities and Futures Commission (SFC) labeled Bybit a "suspicious" platform in March.

Bybit's New Ventures

Despite the scrutiny, Bybit recently launched Bybit.nl, a regulated trading platform for Dutch users. This platform, created in collaboration with SATOS, allows Dutch users to trade over 300 cryptocurrency pairs and benefit from enhanced security measures.

Ethena Stablecoin Impact

Rumors of Bybit's insolvency also raised concerns about Ethena's $2.5 billion stablecoin, USDe.

Despite the rumors, Ethena's asset prices have not dropped, and the company maintains its collateral off-exchange. Athena, known for its 37% yield through complex trades, faces risks due to its centralization and dependency on exchanges like Bybit.