Hidden Road, a Citadel Securities-backed brokerage firm has reportedly ceased access to crypto exchange Bybit for its clients. According to reports, the dispute centers on know-your-customer (KYC) and anti-money laundering (AML) procedures.
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Implementation of the decision comes after Hidden Road informed its clients a few weeks ago about the matter, according to sources close to the developments.
The decision was triggered by a dispute with Bybit over its KYC and AML requirements in line with international best practices. This also comes as regulators everywhere are tightening screws on cryptocurrency trading and exchanges to ensure they are not used for money laundering.
Hidden Road and Some Brokers Tighten Screws
The disagreement between the two firms over Bybit’s KYC and anti-laundering stance and exact understanding of what transpired is still unclear.
According to Bloomberg which cited anonymous sources, Bybit has begun a “comprehensive compliance review” of its brokerage business. This comes as regulators have been increasing scrutiny on crypto exchanges, a decision that followed Binance and CZ’s agreement with the U.S DOJ for failing to fully comply with the anti-money laundering laws.
Binance later asked prime brokers like FalconX and Hidden Road to run tighter checks after the crypto exchange’s historic $4.3 billion settlement with U.S authorities last year.
“Bybit will not comment on specific inquiries related to counterparties. However, the company is committed to transparency and will provide further updates as the review progresses,” a Bybit spokesperson said.
Users Pay the Price
The glitch has knocked on some users, while some clients are disgruntled as they prefer to access crypto with “trusted companies or brokers.”
Regulators in the U.S, for instance, the SEC have accused Binance of letting U.S-based clients trade on the international exchange through offshore entities, without observing the essential controls required by US law.
Now, Binance.US, CZ, and other crypto exchanges have experienced growth in market size ever since the lawsuit and an investigation against Binance.
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OKX and Bybit have reportedly recorded a spike in crypto trading, buoyed by firm demand. Crypto companies and exchanges also moved offshore within tough regulation across the continent.
Hidden Road offers prime brokerage services for digital asset markets and foreign exchange. According to another Bloomberg report, the firm was looking at raising $120 million in a series B equity round last month.
Cryptopolitan reporting by Enacy Mapakame
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