• Bybit has been fined $1.06M for PMLA non-compliance.
• India blocked Bybit sites pausing the exchange operations in the country.
• Bybit is seeking a VDASP license amid compliance confusion.

India’s financial watchdog has levied a hefty fine of $1.06 million (9.27 crore rupees) on Bybit, one of the world’s largest crypto exchanges, for failing to adhere to the country’s stringent anti-money laundering regulations.

While this move underscores India’s commitment to regulating the burgeoning cryptocurrency market, it leaves Bybit’s compliance status in a state of ambiguity.

Why such a hefty fine?

Bybit’s troubles began when it was found operating without securing mandatory registration under the Prevention of Money Laundering Act (PMLA).

According to the Financial Intelligence Unit (FIU) of India, Bybit is classified as a ‘reporting entity’ due to its services in the digital asset space.

In December 2023, the FIU identified several crypto exchanges for non-compliance with local anti-money laundering laws but Bybit was notably not among the listed exchanges.

However, the exchange continued to expand its operations in India without the required registration, prompting the FIU to take action.

Indian authorities, through the Ministry of Electronics and Communication Technology (MEITY), blocked Bybit’s websites under the Information Technology Act, 2000, effectively halting Bybit’s operations in India.

However, the suspension came after Bybit had already announced a pause in its services due to “recent developments with Indian regulators,” hinting at prior knowledge of regulatory scrutiny.

Bybit has applied for a VDASP license in India

Amidst these challenges, Bybit has been actively working towards rectifying its status in India. The exchange has applied for a Virtual Digital Asset Service Provider (VDASP) license, aiming to legally operate within India’s crypto market.

This application was completed back on June 26, 2024, indicating a proactive approach to meet regulatory requirements.

Vikas Gupta, Bybit’s country manager for India, expressed optimism about obtaining a full operations license in the coming weeks, suggesting an expectation of smoother regulatory waters ahead.

Initially, there were announcements from Bybit suggesting successful registration and fine settlement, but these were later retracted, leaving the public and stakeholders in limbo regarding the exact compliance status of Bybit in India.

India’s approach indicates a strong push towards ensuring that all financial entities, including those dealing in cryptocurrencies, adhere strictly to anti-money laundering and counter-terrorism financing norms.

Other major exchanges like Binance, KuCoin, and OKX have also faced similar regulatory actions for non-compliance with PMLA and other financial laws.

WazirX creditors are set to vote on a proposed restructuring plan to address losses from a $235 million hack in July 2024. The vote will determine whether the exchange resumes trading or undergoes liquidation under Singapore’s Companies Act. If approved, the restructuring plan could see trading recommence by April 2025, with initial payouts starting within 10 business days.

WazirX Creditors To Vote On Restructuring Plan

According to a recent statement from the Indian cryptocurrency exchange WazirX, creditors will vote on a restructuring plan to recover losses from the WazirX hack. The proposed plan outlines a 52% immediate debt settlement, with the remaining 48% to be paid from future profits and asset recoveries.

The vote follows approval from the Singapore High Court, allowing WazirX creditors to decide the exchange’s future. If the plan is accepted by at least 75% of creditors, trading may resume by April 2025, and payouts will begin within 10 business days.

In addition, the development comes days after the Singapore High Court granted WazirX approval in late January to convene a Scheme meeting. This meeting will allow creditors to vote on the proposed recovery plan, facilitating a structured repayment of unstolen funds. 

What Happens If Plan Fails?

If WazirX creditors reject the restructuring plan, the exchange will undergo liquidation under Singapore’s Companies Act. This could postpone repayments until 2030, significantly reducing the chances of full recovery for affected users.

Industry experts have warned that liquidation could lead to unpredictable asset distribution. The timeline for payouts would be extended, and the value of recoverable assets could decrease due to market volatility and operational challenges.

Planned Recovery Measures And Future Operations

To facilitate debt repayments and restore operations, WazirX plans to launch a decentralized exchange (DEX) and introduce recovery tokens. The proposal also includes periodic buybacks to stabilize the platform and improve financial sustainability.

Moreover, the restructuring plan will allocate Net Liquid Platform Assets to creditors as part of the recovery process. The company has been working closely with the Committee of Creditors (CoC) to ensure faster distribution and prevent prolonged delays in fund recovery.

The vote will determine whether the Indian exchange can resume trading or enter a liquidation process. The restructuring plan is an alternative to liquidation. It offers creditors a more immediate path to fund recovery. With over 4.4 million creditors involved, the voting process is a crucial moment for the Indian exchange

Meanwhile, WazirX continues its efforts to recover stolen funds, freezing $3 million in assets as part of its recovery plan. Founder Nischal Shetty emphasized that this is just the beginning, reaffirming the platform’s commitment to retrieving lost crypto. The exchange is working with law enforcement to track stolen assets and ensure a smooth recovery process.

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Ronny Mugendi

Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.