How Bybit Reclaims Former FTX Users to Become World’s Second-Largest Cryptocurrency Exchange

According to data from Kaiko, Bybit’s share of trading volume has doubled to 16% since October, surpassing US leader Coinbase Global in March. Zhou’s platform is second only to Binance Holdings for spot and derivatives transactions.

Cryptocurrency recovery

Exchanges have benefited from a doubling in the price of bitcoin over the past year, coinciding with the debut of dedicated U.S. exchange-traded funds. The jump is a return from a bear market and a period of scandals, characterized by the collapse of FTX in 2022.

Soon after that crash, Bybit unveiled a trading account that allows cross-margin trading using more than 160 tokens. Users can also tap into unrealized profits to open new positions. “This was something that no one else had,” Zhou said.

Europe is currently Bybit’s largest market, contributing about 30 to 35 percent of volumes, according to Zhou. Separately, about a fifth comes from the Commonwealth of Independent States (CIS), within which Russia is the largest source of business, he added. The CIS is a loose grouping of former Soviet nations.

Bybit has to walk a thin line in Russia, whose use of cryptocurrencies is under severe scrutiny for possible violations of sanctions imposed following President Vladimir Putin’s invasion of Ukraine.

The Sanctions Trap

Bybit monitors Russian customers and follows “very strict sanctions rules,” Zhou said. The company is opening an office and seeking a digital assets license in neighboring Georgia after obtaining a permit in Kazakhstan last year.

“We see a lot of growth in these areas,” Zhou said. “It’s also a new developing area that has quite a bit of potential.”

The progress of the six-year-old exchange also comes on the heels of a plea deal between market leader Binance and US authorities in November. The settlement included a $4.3 billion corporate fine and prison time for Binance co-founder Zhao Changpeng for fines and anti-money laundering violations.

Bybit, which is considered an “offshore” exchange that primarily serves overseas customers, is undergoing a reset due to tightening regulations governing sprawling digital asset businesses.

Bybit is headquartered in Dubai, United Arab Emirates. Photo: Reuters

New markets

Europe is slowly being supplanted by new markets as rules introduced under cryptocurrency market regulation hold back some products, Zhou said, listing Brazil, Turkey and Africa as new sources of growth.

Earlier this month the platform open to Chinese citizens who can prove they live outside the country, even though Beijing has banned cryptocurrency trading. Zhou has reported growing demand from Chinese expatriates and legal assessments suggest the risks of serving them are “relatively low”.

Another area of ​​concern is the relationship between platforms and prime brokers, which serve as the primary source of liquidity in cryptocurrency markets by matching institutional traders with exchanges. Bybit said in May that it had launched a “compliance review” of its relationships with prime brokers. “Now, if you’re a prime broker, we need to know who you’re dealing with,” Zhou said.

Bybit has more than 30 million users and was founded in 2018, according to its website. According to CoinGecko data, its 24-hour trading volume was $2.9 billion, nearly half of Binance’s $6.3 billion.

The company has offices in Dubai, Singapore and Hong Kong and will open its first European office in the Netherlands around August, Zhou said.

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