Citadel Securities-backed broker Hidden Roads halts access to Bybit

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As a researcher with experience in the financial industry and a focus on digital assets, I’ve closely followed the developments between prime brokerage firm Hidden Road and crypto exchange Bybit. The news of Hidden Road preparing to halt trading for its clients on Bybit due to concerns over the exchange’s KYC/AML procedures is a significant turn of events.

Hidden Roads, a prime brokerage firm, has announced it will no longer provide access to the Bybit cryptocurrency exchange for its clients. This decision stems from a dispute regarding Bybit’s know-your-customer (KYC) and anti-money laundering (AML) procedures.

According to reliable sources, international prime broker Hidden Road is reportedly considering halting trading for its clients on cryptocurrency exchange Bybit. This decision comes in light of growing concerns over the exchange’s compliance with know-your-customer (KYC) and anti-money laundering (AML) regulations.

Based on my analysis of the situation, it appears that Hidden Road notified its clients about an upcoming suspension “a few weeks ago.” However, I cannot provide an exact timeline for when this suspension will take place. Regarding Bybit’s response, they have remained silent on the matter publicly but have assured Bloomberg that they prioritize transparency and will keep their clients updated as more information becomes available during their ongoing review.

The Commodity Futures Trading Commission (CFTC) has issued a subpoena to Coinbase in relation to the case of Bybit Fintech Ltd. and Ben Zhou. @Coinbase and @Bybit_Official are accordingly called upon to provide certain information to the CFTC.

— Ƀitcoin Chris (@CryptoChrisG) November 27, 2023

In November 2023, Coinbase notified certain clients of a subpoena issued by the U.S. Commodity Futures Trading Commission (CFTC) relating to Bybit. The details about the information or documents demanded by the CFTC and the extent of their investigation are still unclear at this point.

Established in 2018 by Marc Asch, Hidden Roads specializes in providing cross-margin and margin financing options for a range of financial instruments, including cash transactions, cleared derivatives, and over-the-counter swaps. Additionally, the company offers prime brokerage services in the crypto market.

In 2022, I was part of the team at Hidden Road that secured a $50 million Series A funding round. Castle Island Ventures took the lead in this investment round, with contributions from other esteemed investors such as Citadel Securities, FTX Ventures, Uncorrelated Ventures, Greycroft, XBTO Humla Ventures, Wintermute, and Coinbase Ventures.

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2024-05-30 09:50