Are Taiwan's Rybit and Pionex the same company? No asset segregation? Understanding all the controversial events in one article.

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Rybit Member Communication Error: Revealing Pionex's Identity?

On the evening of 5/8, Rybit issued a member communication, which unexpectedly turned out to be an announcement from Pionex, sparking discussions in the community about "what is really going on?". According to Rybit's explanation, this was due to referencing the content of announcements from other exchanges, "accidentally" releasing Pionex's announcement instead.

However, the Pionex announcement claimed by Rybit was actually released later than Rybit's own announcement, leading some in the community to question the extent of information exchange between the two and the reasons behind it, which remain to be clarified.

Update on the evening of 5/9: Rybit emphasizes that this was a case of operational error

Are Taiwan's Rybit and Pionex's Vaults Connected? Insights from Blockchain Data

Due to the "mis-sent member communication" incident, the community has also started discussing rumors that the withdrawal addresses of the two exchanges are the same: "meaning withdrawals from both platforms are issued from the same vault." Is this true? Below are the results of an investigative test:

1. Withdrawing USDT from Rybit

When withdrawing USDT TRC-20 from a Rybit account to an external wallet, the source of the funds transferred from Rybit can be identified through the transaction record.

The source address of the funds is: TWDchZBmYvTQBeXD4w8rRUowDv5ka8kiFU

2. Withdrawing USDT from Pionex

When withdrawing USDT TRC-20 from a Pionex account to an external wallet, the source of the funds transferred from Pionex can be identified through the transaction record.

The source address of the funds is: TWDchZBmYvTQBeXD4w8rRUowDv5ka8kiFU, which is the same as the withdrawal source for Rybit

3. Verifying the Address through Blockchain Analysis Tools

Through third-party blockchain tools analyzing the address "TWDchZBmYvTQBeXD4w8rRUowDv5ka8kiFU," the results indicate that this address is labeled as belonging to the "Pionex" wallet.

From the above three points, it appears that Rybit's withdrawal vault originates from Pionex.

Update on 5/9 | Rybit Announcement: Rybit clarifies that the shared withdrawal address with Pionex was a misunderstanding, as Rybit utilizes services from an internationally renowned third-party wallet custody company, leading to the misconception of a shared address.

Additionally, there are discussions in the community about the striking similarity in the withdrawal interfaces of Taiwan's Rybit and Pionex. However, exchange interfaces often reference each other, and it does not necessarily imply a common origin between the two.

Rybit = Pionex Taiwan? So What?

Even if the Taiwan-registered Rybit exchange and the overseas platform Pionex are connected, what does it mean? There are three points that can be discussed:

1. Failure to Achieve Asset Segregation - Update: Rybit emphasizes asset segregation

FTX Japan was able to survive after the bankruptcy of FTX.com because the Japanese regulatory framework clearly defines that exchanges operating compliantly in Japan must implement proper asset segregation, including fiat currencies and digital assets.

While Taiwan currently only regulates "locally registered" cryptocurrency exchange operators through anti-money laundering regulations, in the regulations for "virtual asset trading platform operators to be supervised" that will be issued by the Financial Supervisory Commission in September, "cold and hot wallet management" and "separation and custody of customer and platform operator assets" are two key requirements. If Rybit's exchange funds are mixed with those of the overseas platform Pionex, they would not comply with this requirement.

Note: Exchanges registered locally in Taiwan and cooperating with Taiwanese banks for fiat currency deposits and withdrawals need to comply with FSC regulatory requirements

2. Anti-Money Laundering Declaration Requirements

Rybit exchange submitted an "Anti-Money Laundering Compliance Declaration" to the FSC at the end of 2022. If digital assets are mixed with those of the overseas platform, further scrutiny may be required, along with the implementation of effective anti-money laundering policies.

3. Rybit Remains a Legal and Compliant Platform

In November 2022, there were reports that Rybit, through its well-connected chairman Wu Dewei and collaboration with Pionex founder Chen Yong, introduced Taiwan to "Cmmedia", sparking discussions on the issue of Chinese investment. Rybit's chairman Wu Dewei is also an advisor to Pionex, and prominent lawyer Jian Rongzong witnessed the close relationship between the two companies during a visit last year. Despite this, Rybit claims to be an independent platform unrelated to Pionex.

Regardless, under the current regulatory framework in Taiwan until May, Rybit is indeed a legal and compliant platform.

Hello Binance Taiwan? Pionex's Model as a Beacon for Overseas and Local Operators

Many users of Taiwan exchanges do not understand why overseas platforms cannot establish a presence in Taiwan, as a higher proportion of users have no issues using overseas exchanges such as Pionex, Binance, OKX, etc. However, this is due to the lack of supervision by the Taiwanese FSC over overseas platforms, as was also stated when the FTX bankruptcy occurred. According to the FSC, overseas institutions cannot be regulated.

The term "exchange localization" mostly refers to having a registered company domestically, complying with local regulatory standards, and having local banks providing fiat currency deposit and withdrawal services, among others.

As overseas exchange operators primarily focus on derivatives such as perpetual contracts, futures, and options, directly involving securities laws and regulations, establishing compliant operations open to retail investors in multiple countries is quite challenging. Therefore, exchanges that can establish themselves locally primarily focus on spot trading.

This is why major international exchanges like Binance and FTX only operate localized spot exchanges in the U.S. and Japan.

Recently, major U.S. spot exchanges Coinbase and Gemini have also chosen to establish offshore derivative exchanges due to enforcement pressure in the U.S., seeking a broader market. Additional information: U.S. domestic crypto companies Coinbase and Gemini both launch offshore derivative exchanges

If the "Rybit = Pionex Taiwan" model can comply with regulations, could it be a beacon for overseas exchanges to establish a presence in Taiwan? Perhaps there will be a Binance Taiwan in the future, introducing more diverse brands?

Alternatively, Taiwanese operators could emulate the Pionex model, expanding into the derivatives market overseas under the same brand, freeing their operations from local fiat channels and providing more diversified profit opportunities.?

Taiwan's regulatory framework remains at the stage of FSC's guidance principles, with local operators jointly formulating self-regulatory agreements. Will this lead the industry towards international diversity or maintain a closed-off approach? Additional information: Relying on "associations" for self-regulation without enacting regulations