How Bybit Reclaims Former FTX Users to Become World’s Second-Largest Cryptocurrency Exchange

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.

Crypto 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.

Europe is currently Bybit’s largest market, contributing about 30-35 percent of volumes, according to Zhou. 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, where its use of cryptocurrencies is under heavy scrutiny for possible 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 area that’s developing and has a lot of potential.”

The six-year-old exchange’s advance also comes on the heels of a settlement between market leader Binance and U.S. authorities in November. The deal included a $4.3 billion corporate fine and prison time for Binance co-founder Zhao Changpeng for sanctions 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, despite Beijing’s ban on cryptocurrency trading. Zhou cited growing demand from Chinese expats and legal assessments suggesting the risks of serving them are “relatively low.”

Another area of ​​interest is the relationship between platforms and prime brokers, who act as a key source of liquidity in cryptocurrency markets, 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 are a prime broker, we need to know who you are dealing with,” Zhou said.

Bybit has more than 30 million users and was founded in 2018, its website shows. According to CoinGecko data, trading volume in the past 24 hours was $2.9 billion, nearly half of Binance’s $6.3 billion.

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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