How Bybit Reclaims Former FTX Users to Become the Second Largest Cryptocurrency Exchange in the World

Bybit’s share of trading volume has doubled to 16 percent since October, surpassing U.S. leader Coinbase Global in March, according to data from Kaiko. 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 comeback from a bear market and a period of scandal, marked by the collapse of FTX in 2022.

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

According to Zhou, Europe is currently Bybit’s largest market and contributes between 30% and 35% of volumes. 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 fine line in Russia, whose use of cryptocurrencies is under intense scrutiny for potential violations of sanctions imposed following President Vladimir Putin’s invasion of Ukraine.

The Sanctions Trap

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

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

The six-year-old exchange’s advance 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 as part of the cryptocurrency markets regulation restrict some products, Zhou said, citing 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 noted growing demand from Chinese expats and legal assessments suggest the risks of serving them are “relatively low.”

Another area of ​​interest is the relationship between platforms and prime brokers, which serve as the main source of liquidity in cryptocurrency markets by matching institutional traders to exchanges. Bybit said in May that it had begun a “compliance review” of its dealings 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, its website shows. Trading volume in the past 24 hours was US$2.9 billion, nearly half of Binance’s US$6.3 billion, according to data from CoinGecko.

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

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