Coinbase, the largest cryptocurrency exchange in the United States, is currently involved in a regulatory investigation concerning Bybit, a crypto exchange based in Dubai. The Commodity Futures Trading Commission (CFTC) has issued a subpoena to Coinbase, requesting detailed information regarding user accounts and transactions, specifically those associated with Bybit.
On November 27, 2023, Coinbase sent notifications to its users via email, informing them about the subpoena. These communications explained that unless a legal motion to quash or an objection is filed by November 30, 2023, Coinbase may be required to provide the requested information to the CFTC. Users reported that the email stated, “Coinbase has received a subpoena,” emphasizing that immediate action was not necessary from the recipients.
The CFTC possesses the authority to issue subpoenas and request voluntary statements as part of its investigative powers. In accordance with legal obligations, Coinbase’s policy is to disclose relevant information in response to legal, regulatory, and governmental requests. This position aligns with the exchange’s commitment, as expressed in a post from May, to comply with legal requirements, including those involving subpoenas.
Bybit, led by CEO Ben Zhou, has recently encountered regulatory difficulties in both the United Kingdom and Japan. The exchange, which only implemented mandatory KYC checks earlier this year, also suspended US dollar transfers following the collapse of Silvergate Bank. These developments have subjected Bybit to increased scrutiny from various financial regulatory bodies.
Alice Comfy, CIO of Shinoji Research, commented on the situation, suggesting that the CFTC’s actions may be aimed at establishing that Bybit served US customers, potentially resulting in similar regulatory responses as observed with Binance and BitMEX.
Against this background, the Securities and Exchange Commission (SEC) has been actively involved in overseeing regulations. Recently, PayPal revealed that it had received a subpoena from the SEC regarding its PayPal USD stablecoin, suggesting a wider regulatory scrutiny on the cryptocurrency industry.
Coinbase has also faced its fair share of regulatory difficulties. In June, the SEC filed a lawsuit against Coinbase, claiming that the exchange had unlawfully operated as a broker and clearing agency. This legal action resembled the accusations leveled against Binance, which included allegations of deceiving customers and misusing funds.