Coinbase Users Receive Subpoena Notice in CFTC’s Bybit Investigation

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In a recent development, Coinbase, a leading cryptocurrency exchange, has informed some of its users about a subpoena from a U.S. regulator concerning Bybit, another cryptocurrency exchange. This information was confirmed by someone familiar with the situation and has been circulating on social media.

CFTC’s Examination of Bybit: Impact on Coinbase Customers

According to the email sent by Coinbase, the Commodity Futures Trading Commission (CFTC) is examining Bybit and is seeking information on Coinbase client accounts. This move suggests that the regulatory action focuses more on Bybit users than Coinbase users. However, it raises concerns among those who have interacted with Bybit.

The email states: “No action is required from you, but Coinbase may respond to the Subpoena unless served before November 30, 2023, with a motion to quash or other objection to the subpoena that has been filed with the Court – including by sending information concerning your Coinbase account to the Commodity Futures Trading Commission.”

Scope of the Subpoena

The email appears to have been sent only to Coinbase users who have had interactions with Bybit. According to user reports, even opening an unused Bybit account could trigger this notification, and there seems to be no time limit on when this interaction may have occurred.

Coinbase’s statement highlighted its compliance obligations: “We may access, read, preserve, and disclose information when we believe it is reasonably necessary to comply with law, legal obligations, regulations, law enforcement, governmental, and other legal requests, court orders, or for disclosure to tax authorities.”

The CFTC is authorized to conduct investigations using various methods, including subpoenas. This is in line with the enforcement guidelines of the regulatory body. In May, Coinbase acknowledged its legal requirement to collect and share data related to subpoenas.

The objective of the CFTC’s Probe into Bybit

The government’s move to subpoena Coinbase users indicates an effort to prove that Bybit, a Dubai-based exchange, is engaging with American consumers. This is significant because Bybit claims it does not operate in the United States. The CFTC might use this information to argue that Bybit has been unlawfully conducting business in the U.S.

Bybit, founded in 2018 by Chinese businessman Ben Zhou, only implemented mandatory Know Your Customer (KYC) authentication for all accounts in May 2023.

This development underscores U.S. regulators’ increasing scrutiny of cryptocurrency exchanges and the complexities for users who navigate multiple platforms. Coinbase’s involvement in the CFTC’s investigation into Bybit highlights the interconnected nature of global cryptocurrency operations and their legal challenges.