The community questioned Bybit’s timing in revealing their exposure, with many demanding proof to back up the reassurance from the CEO.
Genesis Global Trading, a prominent crypto lender, filed for Chapter 11 bankruptcy protection in New York on Jan. 20, becoming the latest company to declare bankruptcy in the wake of FTX’s collapse. However, the focus of the crypto community has shifted toward other firms that had exposure to the lending firm.
One report suggested that a total of nine crypto firms had exposure to Genesis, including Gemini, Bybit, VanEck, Decentraland and others. Bybit CEO Ben Zhou was quick to respond to the reports and clarified that Bybit indeed had $150 million exposure to the bankrupt crypto lender via its investment arm Mirana.
Zhou noted that Mirana only managed a portion of Bybit’s assets and the reported $151 million exposure has about $120 million of collateralized positions, which Mirana had already liquidated. He also assured that client funds are separated and Bybit’s earn products don’t use Mirana.
1. Mirana is the investment arm of bybit.
2. Mirana only manage some bybit company asset. Client fund is separated snd bybit earn product doesn’t use mirana.
3. The reported 151m has abt 120m of collateralized positions which mirana had already liquidated. https://t.co/kqVPpAMGky
— Ben Zhou (@benbybit) January 20, 2023
While many appreciated the quick clarification from the co-founder, many others had more questions regarding the clarification, especially about the company’s earn products.
One user demanded full disclosure about the earn products and how yields are generated. Another user questioned their relationship with Mirana, asking whether they are operating on a similar strategy to FTX/Alameda.
“We are fine and our users have totally nothing to worry about”
Though, you have an Earn program and didn’t disclose how the yield was generated?
Are you running an FTX/Alameda kind of relationship or nah? https://t.co/pumAdQFvRe
— Diyan Slavov (@diyan_slavov) January 20, 2023
Others were puzzled by the timing of the revelation, given Genesis’s well-known troubles. Some of its biggest lenders, such as Gemini, have been actively demanding action against Genesis’s parent company, the Digital Currency Group. One user wrote,
“Tweeting ‘full disclosure’ only when caught with your pants down automatically refutes your claim. If this was ‘full disclosure’ ByBit would have said it months ago.”
Many others demanded proof of transactions between Bybit and Marina for assurance while reminding Zhou that similar statements have been made in the past by FTX executives.
Thanks for being quick to respond to this. Just know everyone is still on edge regardless. The more proof/evidence you can provide, the better people will feel
— CryptoData (@TheCryptoData) January 20, 2023
Cointelegraph reached out to Bybit to get some clarity on its earn program and raise some of the community’s questions but received no response by the time of publication.