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Hong Kong Regulator Adds Bybit to Alert List and Issues User Warning

The Securities and Futures Commission added 11 products offered by the exchange to its suspicious investment products list and accused Bybit of conducting regulated activity without a license.

Bybit Hong Kong SFC

The Hong Kong markets regulator, the Securities and Futures Commission, has recently added cryptocurrency exchange Bybit to its Alert List and informed the public that multiple crypto-related products offered by Bybit raise concerns. The 11 products now added to the country’s suspicious investments list include options, futures contracts, leveraged tokens, staking and lending. 

“The SFC is concerned that these products have also been offered to Hong Kong investors and wishes to make it clear that no entity in the Bybit group is licensed by or registered with the SFC to conduct any “regulated activity” in Hong Kong.”
Hong Kong has tightened its grip on VATPs since the JPEX scandal last Autumn. Back then, the SFC promised to spread transparent and full information on the topic and begin investor education to increase awareness of fraud prevention. The authority also announced the publication of a special alert list of suspicious exchanges and lists of VATPs at different stages of licensing. 

Hong Kong allows the dealing of crypto-related “futures contracts” or “securities”, but this is considered a regulated activity and is supposed to be licensed by the SFC. It is also forbidden to advertise these products to the Hong Kong public without the regulator's authorization.

“Any person who contravenes a relevant provision may be prosecuted and, if convicted, subject to criminal sanctions. The SFC will not hesitate to take enforcement action against unlicensed activities where appropriate.”

Bybit at one point positioned itself as a Singapore-based exchange, but is currently headquartered in Dubai. The exchange claims to be regulated by Dubai VARA, the Cyprus Securities and Exchange Commission, and the Astana Financial Services Authority in Kazakhstan, although it should be noted that its MVP Preparatory License in Dubai is still pending approval.

The exchange launched a dedicated Bybit Hong Kong platform in May 2023, promising to feature product offerings that are compliant with relevant regulatory laws. At the time of writing, the exchange hasn’t publically commented on the situation, but a company spokesperson shared the following information:

"Since different products are listed for various regions to meet local compliance requirements, you can be confident that these products are not available in the HK market. Bybit maintains a close dialogue with regulators around the world including HK and strives to comply with all applicable regulations."

The SFC has also recently added two fake domains posing as OSL Digital Securities and HashKey and several domains impersonating MEXC to the Alert List. Earlier this month, BitForex was also added as “suspected of engaging in fraudulent activities” after it ceased withdrawals and entered ‘radio silence’ mode at the end of February.

All virtual asset trading operators working in Hong Kong were supposed to apply for the SFC license by February 29. Failure to do so meant that a company must close down its businesses in Hong Kong by 31 May. Presently, only OSL and HashKey have obtained their Hong Kong VATP licenses. 24 exchanges including Huobi, OKX, and have submitted applications and now are awaiting SFC approval.

Bybit has also applied for a Hong Kong VATP license and is still included in the list, although it is possible that the current troubles might preclude the exchange from approval.