Bybit: crypto must ‘step up’ transparency efforts in FTX aftermath

Bybit, one of the world’s largest crypto exchanges, wants to see more transparency across the crypto market as the industry once again looks to emerge from another staggering episode of confidence-supping ‘opaqueness’.

On Tuesday, Invezz broke the news that Binance had agreed to bail out FTX, with Binance CEO Changpeng Zhao revealing the companies had signed a letter of intent for the acquisition. But he added that nothing was cast in stone, suggesting the deal could still fall through.

The market volatility that ensued amid the shock saw Bitcoin (BTC) fall to lows near $17,100 and FTX token tank more than 85% nosediving from around $22 to near $4.

What happened at FTX will no doubt add to the regulatory spotlight on cryptocurrency and crypto exchange platforms. And Bybit believes crypto can do better.

Exchanges are ‘not banks’

This week’s jaw-dropping news about FTX and Alameda Research aside, Bybit says this is a wakeup call. Other than transparency, issues that must be dealt with head on include customer funds safety and custodianship.

According to the exchange’s co-founder and CEO Ben Zhou, these are what will help not only protect customers, but also lead to market stability.

“The entire sector has a duty and obligation to do better by our customers.”

As the Binance/FTX deal remains in limbo pending due diligence and clarity of other factors, one key fear for investors is whether they will be made whole. It is a big issue and one which Bybit wants sorted via transparency and responsible business behavior.

Explaining Bybit’s stance on the issue of safety of customer funds, Zhou said:

“Bybit is NOT a bank, we are a custodian of our customers’ funds. We do not use those funds for any other purpose! Bybit can guarantee that all clients’ assets are stored in one to one liquidity held in custody – available in full, on request, and without delay if requested.” 

Part of the transparency, Zhou added, will come from a Proof of Reserve programme. Binance’s CZ noted his company will soon publish its Merkle tree reserves as a way of increasing transparency, urging other platforms to do the same.

Bybit has announced it expects to publish its Merkle tree certificate soon, and so have Gate.io, Huobi, Poloniex, OKX and KuCoin among others. As Gate.io notes in the tweet below, proof-of-reserves is an audit that helps show a custodian holds those assets it says it has.