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Rumors of Bybit’s Insolvency Trigger Panic in the Crypto Community

source-logo  beincrypto.com 23 May 2024 07:58, UTC

Recent rumors suggesting the insolvency of crypto exchange Bybit have sent shockwaves through the crypto community, escalating panic and speculation.

A significant error on Arkham’s on-chain analysis platform mistakenly showed a drastic drop in Bybit’s assets, triggering anxiety.

Bybit Gives Clarification Regarding the Insolvency Rumors

Initially fueled by the alarming graphical representation, the rumors led to a substantial outflow of funds. Reports from DefiLlama co-founder 0xngmi indicate withdrawals exceeding $50 million. Despite this, 0xngmi contextualized the situation, stating that the withdrawals are nothing compared to Bybit’s total assets.

In response to these unsettling events, a Bybit spokesperson clarified the situation in an interview with BeInCrypto. The Bybit spokesperson pointed out that the rumors were baseless and possibly propagated by individuals dissatisfied with Bybit’s stringent compliance measures.

Read more: Bybit Review 2024: Review of Its Security, Fees, and Features

“We were surprised to unexpectedly receive an inquiry from some private talks. Bybit is very stable and safe with all your assets,” the spokesperson told BeInCrypto.

Furthermore, Bybit has encouraged its users and stakeholders to refer to its official Proof of Reserves (POR) report. This report confirms the stability of its asset base, along with data from other reputable on-chain analysis platforms such as Nansen and DefiLlama.

Bybit Total Assets. Source: DefiLlama

This incident occurs against a backdrop of heightened vigilance within the crypto community. Following the high-profile collapses of several crypto firms in 2022, including FTX and Celsius, there is a pervasive atmosphere of caution and skepticism about the solvency of crypto exchanges.

Historically, such rumors have not been confined to Bybit alone. In December 2023, similar concerns were raised about another exchange, MEXC, following the mysterious deletion of the “MEXC_CEO” Twitter account. Consequently, user complaints about frozen funds on social platforms intensified worries about the financial health of crypto exchanges.

Read more: What Is Merkle Tree Proof of Reserves?

The rapid response from Bybit and the clarification provided should reassure its users and investors. Nevertheless, this incident highlights the fragile nature of trust in the volatile crypto sector and the speed at which misinformation can spread, affecting market stability and investor confidence.