The community questioned Bybit’s timing in revealing their exposure now and many demanded proof to back up the reassurance from the CEO.
Genesis Global, 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 towards other crypto firms that had exposure to the lending firm.
One report suggested that a total of nine crypto firms had various exposures to Genesis, including the likes of Germini, Bybit, VanEck, Decentraland and a few 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 the 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 and 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 also puzzled by the timing of the revelation, given Genesis’s troubles have been well known for a couple of months now, and some of its biggest lender, such as Gemini, has 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 the likes of 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 as well but didn’t get a response at press time.