In the high-stakes game of global cryptocurrency trading, the rules of engagement are becoming increasingly complex. As US regulators tighten their grip on the industry, offshore exchanges find themselves walking a tightrope – eager to tap into the lucrative American market while seeking to avoid the costly fate of giants like Binance. But with nearly a million US traders flocking to platforms like Bybit, Bitget, and OKX, the question looms: are these exchanges playing with fire?
The Shadow of Binance’s $4B Settlement
The specter of Binance’s massive $4 billion settlement with the US government last year hangs heavy over the industry. The world’s largest exchange found itself in hot water for allegedly allowing Americans to trade on its platform, violating US regulations. It was a stark reminder that in the Wild West of crypto, no one is too big to fall.
Now, data from Sensor Tower suggests that Bybit, Bitget, and OKX collectively hosted nearly 1 million US-based monthly active users (MAUs) in August alone. While these MAUs might not necessarily be trading – perhaps merely tracking prices or exploring the platforms – the sheer volume raises eyebrows.
Navigating the Gray Zone
Officially, these exchanges prohibit US traders, as they lack the necessary licenses to operate in the country. Bybit, for instance, saw a staggering 451,800 US-based MAUs in August, despite its Terms of Use categorically excluding American users. Bitget and OKX followed with 281,600 and 144,000 US MAUs respectively.
So how are these users accessing the platforms? Enter the murky world of VPNs and false identities. By masking their locations and providing fake or rented KYC credentials, determined traders can bypass the exchanges’ geographic restrictions with relative ease.
“Although this practice often violates the terms of service of many platforms, it highlights the persistent demand for access to global markets, despite regulatory hurdles,” notes Daniel Arroche, a partner at crypto law firm d&a partners.
Exchanges Respond, But Questions Linger
The exchanges in question assert that they have measures in place to prevent US access. Bybit, for example, states that users from restricted jurisdictions “will not be able to complete the registration process” without passing KYC checks. IP restrictions, they claim, block access from banned regions.
Yet the sheer volume of US-based MAUs suggests that these safeguards are far from foolproof. Bitget acknowledges that VPNs could explain the Sensor Tower data, as the analytics firm “tracks only the country where the app was downloaded from, without being able to better discern the actual nationality of users.”
The Specter of Regulatory Action
As the US continues its crackdown on the crypto industry, exchanges operating in this gray zone may find themselves in the crosshairs. The costly lesson of Binance looms large, and regulators have shown a willingness to pursue enforcement actions against platforms deemed non-compliant.
For now, the likes of Bybit, Bitget, and OKX continue to draw American traders, even as they publicly distance themselves from the US market. But as scrutiny intensifies and the stakes rise, the question remains: how long can they walk this tightrope before risking a costly fall?
The crypto world’s Wild West days may be numbered as the regulatory noose tightens. But as long as the allure of global markets beckons and the tools to bypass restrictions exist, determined traders will likely continue to seek out these offshore oases – even as the ground shifts beneath their feet.
