By
Svetlana Soroka
June 14th, 2024
Bybit CEO provided a link to the exchange’s proof-of-reserves (PoR) and a Nansen dashboard displaying all the cryptocurrencies held by the platform.
On May 22, rumors began circulating on X that the cryptocurrency exchange Bybit might be facing insolvency. These rumors were triggered by a post from blockchain analytics platform Arkham Intelligence, which misrepresented Bybit’s proof-of-reserves (PoR) data, suggesting a significant drop in the company’s reserve balance.
This speculation led to a mass exodus of withdrawals from the platform as users hurried to secure their assets, fearing a repeat of the FTX bankruptcy saga.
The growing concerns prompted Bybit CEO Ben Zhou to address the rumors directly on X. Zhou denied the insolvency claims, calling them false.
“Hearing some rumors about Bybit being insolvent or hacked, etc. Please note that we have updated our PoR this month. You can view all Bybit wallets through Nansen (Total more than $11B). None of the rumors that I have seen so far have any real facts supporting them. Please be aware,” Zhou wrote on X.
Bybit CEO Tries to Prove Financial Health
To further reassure users that the exchange has a healthy balance sheet, Zhou provided a link to the exchange’s proof-of-reserves (PoR) and a Nansen dashboard displaying all the cryptocurrencies held by the platform.
The PoR showed that users’ assets, including Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Litecoin (LTC), and stablecoins, exceed 100% of the total funds deposited by users.
The reserve ratios for some of the major cryptocurrencies held by the exchange are 116% for BTC, 106% for ETH, 111% for SOL, 129% for USDC, and 107% for USDT.
This means that Bybit has more than enough funds to meet users’ withdrawal requests if they choose to withdraw all their assets from the platform. Additionally, the Nansen dashboard revealed that the total amount of assets contained in Bybit’s wallets is worth over $11 billion if converted to US dollars.
According to Nansen, the net worth reflects the total value of the token holdings in Bybit’s provided addresses. However, the analytics company cautioned that the data should not be considered a comprehensive statement of Bybit’s actual assets or reserves.
Investor Concerns and Market History
Despite Zhou’s reassurances, investors have withdrawn around $5 million from the platform. The move was influenced by previous experiences where insolvency rumors turned out to be true.
In the crypto industry, several bankruptcy cases began with rumors, even as their executives tried refuting the allegations of insolvency.
For example, before FTX officially filed for bankruptcy, the company CEO Sam Bankman-Fried (SBF) claimed it was financially strong and capable of honoring users’ withdrawal requests. The company was posed by CoinDesk for suffering a liquidity crisis in 2022.
In an attempt to avoid panic and stabilize the situation, FTX sought a bailout deal with Binance. However, Binance pulled out of the deal, which ultimately led to FTX’s collapse in November 2022.
Similarly, other companies like Celsius Network, BlockFi, and Voyager Digital, which faced liquidity crises and subsequently went bankrupt, tried to stay afloat by secretly seeking additional funds from investors to continue operations.