The crypto industry is facing a major setback as Dubai-based crypto exchange Bybit has suspended United States dollar deposits via bank transfers due to “service outages from a partner.” Funds can be withdrawn through wire transfers until March 10.
The halt comes just a day after Silvergate Bank announced plans to discontinue its digital assets’ payment network, claiming the termination is a “risk-based decision.” The network was a major on- and off-ramp for USD in the U.S. crypto industry.
Bybit is one of the companies with exposure to the crypto lender Genesis Global Trading, which filed for Chapter 11 bankruptcy on Jan. 20. According to Bybit CEO Ben Zhou, the exposure amounts to $150 million via its investment arm, Mirana Asset Management. Zhou claims $120 million of the funds were collateralized and had already been liquidated.
The exchange has urged clients planning to withdraw USD to do so “as soon as possible to avoid potential disruptions.” Users can continue to make USD deposits via the Advcash Wallet or with a credit card. Withdrawals through the Advcash Wallet are scheduled to be available soon.
Regulatory pressure and market outflows after the dramatic collapse of cryptocurrency exchange FTX in November 2022 are driving U.S. banks to reduce their exposure to cryptocurrency assets. In February, Binance announced it would temporarily suspend bank transfers of U.S. dollars. Signature Bank previously announced it was drastically decreasing crypto deposits.
Bybit’s suspension of USD deposits is a major setback for the crypto industry, and it remains to be seen how the exchange will respond to the situation. It is clear that the industry is facing a difficult time, and it is important for users to be aware of the risks associated with crypto trading.