Recent rumors circulating on social media about Bybit crypto exchange’s alleged insolvency have been firmly denied by CEO Ben Zhou. Obscure social media accounts began spreading these rumors, with one user suggesting that a bug in a proof-of-reserves graph from Arkham Intelligence might have sparked the speculation. Zhou promptly dismissed these claims, stating they were baseless.
Zhou reinforced his point by sharing the exchange’s Proof of Reserves, which showed Bybit’s assets across various wallets. The exchange’s Proof of Reserves website confirms that all assets are fully collateralized, with reserves exceeding 100%. Specifically, the reserve ratios for Bitcoin, Ethereum, USDT, and USDC are 116%, 106%, 107%, and 129%, respectively. Nansen’s data shows that Bybit holds over $11.3 billion in assets, although the dashboard included a disclaimer noting that it was not intended to be a comprehensive statement of Bybit’s actual reserves.
0xngmi, the pseudonymous co-founder of DeFillama, also downplayed community concerns, pointing out that outflows from the platform as of May 22 were minor compared to its asset balance. Nonetheless, DeFillama’s CEX transparency dashboard showed that Bybit users had withdrawn $115 million in digital assets from the platform as of May 23, making it the second-highest amount of withdrawals during the reporting period among the centralized trading platforms monitored by the crypto analytics platform.
Some community concerns are unsurprising, given that Bybit is facing a regulatory challenge in France. French authorities have warned crypto investors that Bybit is not registered as a digital asset provider in the country, adding that access to the platform’s website might be blocked. Moreover, the crypto community’s distrust of centralized exchanges has increased following the high-profile collapse of FTX in 2022. FTX, once one of the largest crypto platforms, collapsed after its leadership team was found to have misused customer funds. Its founder, Sam Bankman-Fried, was convicted on criminal charges in November 2023 and received a 24-year sentence in March.
It is essential to critically evaluate rumors and misinformation circulating on social media about crypto exchanges like Bybit. While some concerns may be valid, it is crucial to rely on verified information and data to make informed decisions in the volatile world of cryptocurrency trading. CEO Ben Zhou’s swift denial of the insolvency rumors and the transparency of Bybit’s Proof of Reserves should provide some reassurance to users and investors alike. However, ongoing regulatory challenges and the broader community distrust of centralized exchanges underscore the need for continued vigilance and due diligence in the crypto space.