Bybit Exchange Reaches Settlement Agreement with Ontario Regulator

Bybit, a cryp­tocur­ren­cy exchange, has announced that it has reached a set­tle­ment agree­ment with the Ontario Secu­ri­ties Com­mis­sion (“OSC”) regard­ing the issues raised in the OSC’s State­ment of Alle­ga­tions of June 21, 2021. In a nut­shell, in accor­dance with the terms of the Set­tle­ment Agree­ment, Bybit has agreed to return rough­ly $2.47 mil­lion USD in prof­its. These are monies that were obtained through its Ontario accounts. Also, the com­pa­ny has agreed to pay OSC $10,000 CAD to cov­er the costs incurred. Bybit was not sub­ject­ed to any addi­tion­al finan­cial penalties.

How it all started and where it could go

Two days ago, the OSC found that the Bybit and KuCoin exchanges were oper­at­ing non-com­pli­ant plat­forms. Specif­i­cal­ly, the plat­forms ille­gal­ly per­mit­ted res­i­dents of Ontario to trade unreg­is­tered secu­ri­ties. Unlike Bybit, how­ev­er, KuCoin has been accused of refus­ing to coop­er­ate with the OSC’s probe. This has result­ed in a $1.6 mil­lion penal­ty and a per­ma­nent ban on KuCoin from par­tic­i­pat­ing in Ontario’s finan­cial markets.

Mean­while, Bybit has agreed not to open new accounts for Ontario res­i­dents while the reg­is­tra­tion process is con­tin­u­ing. In addi­tion, it did not offer any new prod­ucts to Ontario investors who already had accounts with the com­pa­ny. The com­pa­ny also didn’t engage in any mar­ket­ing or pro­mo­tion efforts aimed specif­i­cal­ly at cit­i­zens of Ontario. But Bybit will shut down its Ontario oper­a­tions if the reg­is­tra­tion talks fail.

Bybit CEO and co-founder Ben Zhou had the fol­low­ing to say about the company:

“It has always been our pri­ma­ry objec­tive to oper­ate our busi­ness in com­pli­ance with all rel­e­vant rules and reg­u­la­tions in Ontario. Bybit took imme­di­ate steps to coop­er­ate with the OSC upon being noti­fied of the issuance of the State­ment of Alle­ga­tions and we have start­ed the reg­is­tra­tion and com­pli­ance process in Ontario,”

Bybit will require exist­ing Ontario retail investors to liq­ui­date their stakes in cer­tain restrict­ed items. Lever­age, mar­gin or cred­it exten­sion arrange­ments are among these. Fur­ther­more, Ontario res­i­dents can with­draw any funds or assets that are still in their accounts. Alter­na­tive­ly, they can use the funds to pur­chase prod­ucts that are not sub­ject to restrictions.