In the halls of offshore crypto exchanges, American traders are like museum visitors – they can look, but they’re not supposed to touch. Yet nearly a million curious US eyes seem to be glancing in the direction of forbidden fruit each month, according to new data. Are they simply window shopping or sneaking a taste?
The Allure of Geoblocked Exchanges
Bybit, Bitget, and OKX – three of the largest crypto exchanges worldwide – collectively had almost 877,000 monthly active users (MAU) from the US in August, as revealed in research from Sensor Tower obtained by CoinDesk. The catch? All three exchanges prohibit US traders as they lack the necessary licenses.
Being “active” doesn’t necessarily mean trading, however. If someone in the US merely downloads a mobile app from Apple or Google and takes any action with it during a month, they’re considered an MAU. Checking a price chart, as one can on CoinDesk’s pages? Not an invite for regulatory wrath. Trading, on the other hand, could be asking for trouble.
Binance’s Billion Dollar Blunder
Almost exactly a year ago, Binance, the world’s top exchange, was strong-armed into writing the US government a check for over $4 billion to settle charges partly tied to wrongfully allowing Americans to trade on its platform. Since then, the crypto industry has taken notice: having US clients can be a pricey oversight.
Polymarket may also be learning this lesson the hard way amid reports that its CEO’s home was raided last week – allegedly because people in the US, contrary to a 2022 agreement with regulators, could trade on the popular prediction market. (Though who knows if the Justice Department under President Donald Trump’s new administration will uphold any probe.)
VPNs and Fake IDs: The Crypto Workaround
Despite Bybit, Bitget, and OKX warning website visitors with US IP addresses that they’re not permitted to trade, users can hide their location using virtual private networks or VPNs. And while all three exchanges erect another barrier to KEEP Americans out by requiring a certain level of know-your-customer (KYC) identification, traders intent on circumventing such obstacles are known to obtain fake, stolen, or rented credentials.
Users who attempt to access the Bitget app from any US IP address will receive a notice that access is restricted.
– Bitget spokesperson
In jurisdictions with strict crypto rules, like the United States, individuals often resort to VPNs for access to offshore crypto exchanges, said Daniel Arroche, a partner at French crypto firm d&a partners.
While such practices frequently violate the terms of service of many platforms, it underscores the persistent demand for access to global markets, despite regulatory hurdles.
– Daniel Arroche, d&a partners
Exchanges Respond to US User Numbers
Bybit, an exchange that has surged in the last year or so to become the second largest after Binance by some measures, appears to have the biggest US MAU contingent – a jurisdiction the firm says is categorically excluded from its platform – with 451,800 such users in August, according to Sensor Tower’s data.
Bitget had the next highest MAU count in the US at 281,600, followed by OKX at 144,000, also recorded in August by Sensor Tower, a data provider sometimes cited by the likes of The Wall Street Journal, New York Times and Bloomberg.
A Bybit representative said the exchange has taken various measures including KYC procedures and IP address bans to ensure its services and products are not accessible to individuals from restricted jurisdictions.
Users attempting to download the app or access the platform from a restricted jurisdiction will not be able to complete the registration process if their submitted KYC documents do not indicate otherwise. Additionally, Bybit has implemented IP restrictions to block access from these restricted jurisdictions.
– Bybit spokesperson
Bitget stated it “adheres to global compliance standards by setting regional restrictions, including prohibited access for US citizens and various countries,” and that “anyone trying to access the Bitget app from any US IP address will receive a notice that access is restricted.”
As for the Sensor Tower data, Bitget said: “ONE possible explanation…is that users from other countries are using methods such as VPN to MASK their location and downloading crypto exchange apps via app stores. Sensor Tower only tracks the country from which the app was downloaded, without being able to further identify the actual nationalities of users.”
OKX initially did not respond to requests for comment. After publication of this article, a spokesperson said the OKX app can be used as a non-custodial wallet without trading on the exchange.
US users can download the OKX app solely for the wallet… Those living in the US have a legitimate reason to use the OKX Wallet for self-custody needs, similar to MetaMask, Coinbase Wallet, and other wallet apps.
– OKX spokesperson
The Perils of Skirting US Regulations
The hefty price Binance paid serves as a stark warning to other exchanges entertaining American clients on the sly. And with Polymarket now facing increased scrutiny, the risks of playing fast and loose with US rules are coming into sharp focus.
As the saying goes, those who don’t learn from history are doomed to repeat it. In the high-stakes game of crypto, with billions on the line, exchanges may want to think twice before rolling the dice with US regulations. The house, as Binance can attest, doesn’t always win.
