Prime brokerage firm Hidden Road, backed by Citadel Securities, will restrict client access to Bybit, according to Bloomberg.
Sources indicate the decision stems from disagreements with the cryptocurrency exchange over KYC/AML procedures.
Bybit, registered in Dubai, stated in response to an inquiry that it has initiated a “comprehensive compliance review” of its brokerage business. These actions aim to adhere to relevant regulations and enhance the client onboarding process.
“Bybit will not comment on specific counterparty-related inquiries at this time. However, the company is committed to transparency and will provide information as the review progresses,” a spokesperson for the exchange stated.
Hidden Road declined to comment.
According to Bloomberg, the exact nature of the disagreement between the two firms remains unclear. Prime brokers, catering to institutional crypto traders, are a key source of liquidity in the digital asset market.
Data from CoinGecko shows that in the first quarter, Bybit ranked third in spot trading volume among centralized exchanges, with $368.2 billion or 8.6%. The platform trailed only Binance (48.5%) and Upbit (8.9%).
The role of prime brokers in the industry has come under scrutiny from U.S. authorities following Binance’s settlement with the Department of Justice, which involved a $4.3 billion payment. Regulators accused the exchange of allowing American clients to trade through offshore entities without the required legal oversight.
In March, Binance requested its prime brokers, such as FalconX and Hidden Road, to tighten compliance checks for U.S. users to avoid interactions with them.
In April, Russian traffic to Bybit reached 25%, significantly surpassing the figures of other exchanges.