The Commodity Futures Trading Commission (CFTC), the federal agency regulating the U.S. derivatives markets, is reportedly targeting Coinbase users who have interacted with Bybit, a Singapore-based crypto derivatives exchange.
According to sources familiar with the matter, the CFTC has issued subpoenas to Coinbase, one of the largest and most popular crypto exchanges in the U.S., to obtain information about its customers who have traded on Bybit or transferred funds to or from the platform.
The CFTC is actively investigating whether these users have violated any U.S. laws or regulations by engaging in unregistered or illegal trading activities on Bybit, which is not authorized to offer its services to U.S. residents.
Bybit is one of the leading crypto derivatives exchanges in the world, offering futures and perpetual contracts on various cryptocurrencies, such as Bitcoin, Ethereum, and XRP.
However, the platform has been under scrutiny by several regulators, including the U.K.’s Financial Conduct Authority (FCA), which banned Bybit from operating in the country in January 2021, and the Japanese Financial Services Agency (FSA), which issued a warning against Bybit in May 2021.
The CFTC has also been cracking down on unregulated crypto derivatives platforms, such as BitMEX, which was charged with violating the Bank Secrecy Act and the Commodity Exchange Act in October 2020.
Coinbase, on the other hand, is one of the most compliant and regulated crypto exchanges in the U.S., having obtained licenses from the CFTC, the Securities and Exchange Commission (SEC), and various state regulators.
Coinbase also operates a Futures Commission Merchant (FCM), which allows it to offer regulated crypto futures products to its eligible U.S. customers.
Coinbase has recently settled with the CFTC for $6.5 million over old trading practices that resulted in false or misleading reports on its platform between 2015 and 2018.
It is unclear how many Coinbase users are affected by the CFTC’s subpoenas, or what the potential consequences are for them.
Neither Coinbase nor Bybit have commented on the matter publicly.
However, some experts have advised Coinbase users to exercise caution and avoid using unregulated or offshore crypto derivatives platforms, as they may expose themselves to legal risks and financial losses.