Bybit Geofencing & VPN Detection: What Traders Need to Know

Imagine trying to log into your favorite crypto exchange, only to be blocked because the platform thinks you’re in a restricted country. That’s the reality for many traders trying to access Bybit a leading cryptocurrency derivatives exchange that serves millions of global users. The exchange relies on a mix of Geofencing a virtual fence that blocks traffic from specific jurisdictions based on IP‑based location data and VPN detection technology that tries to spot traffic routed through virtual private networks. If you’re a trader, you’ll want to know how these controls work, why they exist, and what you can (and can’t) do about them.

Quick Takeaways

• Bybit blocks access from the United States and other restricted jurisdictions using IP‑based geofencing.
• Standard commercial VPNs can often bypass the fence because Bybit’s detection is basic.
• Advanced detection methods (device fingerprinting, timing analysis) are still limited on Bybit.
• Violating Bybit’s terms can lead to account freezes, fund seizures, or legal scrutiny.
• Future upgrades may include machine‑learning risk scoring and tighter KYC cross‑checks.

Why Bybit Uses Geofencing

Regulators in the United States a jurisdiction with strict crypto licensing requirements have cracked down on offshore exchanges that don’t hold a domestic license. Bybit’s Terms of Service explicitly forbid users from the U.S., Canada’s provinces with similar restrictions, and a handful of other regions. The simplest way to enforce that rule is to stop traffic coming from IP ranges associated with those countries - that’s the core of geofencing.

Jake Chervinsky, a well‑known crypto lawyer, described geofencing as a “last‑ditch” compliance move when a platform can’t meet a regulator’s standards. Bybit chose this route instead of building a full U.S.‑compliant subsidiary like Binance did with Binance.US. The trade‑off is clear: keep a single global platform, but block a lucrative market.

How IP‑Based Geofencing Works on Bybit

When you first visit Bybit’s website or launch its mobile app, the platform checks the IP address that your device presents. That address is looked up in a geo‑IP database (think MaxMind or IP2Location) which maps the address to a country. If the result is a restricted nation, the login page pops up with a generic “service not available in your region” message.

Bybit adds a second layer during account creation: the KYC screen asks for a government‑issued ID. The exchange cross‑references the ID’s issuing country with the IP country. In theory, a mismatch should raise a flag, but the CoinDesk cryptocurrency news outlet that investigated Bybit’s controls investigation showed the check is easily sidestepped. Users simply switch to a VPN server in an allowed country before uploading a foreign passport, and the system accepts the data at face value.

VPN Detection - What Bybit Currently Does

Detecting VPN traffic is tougher than spotting an IP address because VPN providers own many IP ranges that appear perfectly legitimate. Bybit’s current detection relies on three basic tactics:

1. Maintaining a blacklist of known VPN IP blocks (often outdated).
2. Checking for rapid IP changes during a single session.
3. Looking for mismatched device/browser fingerprints.

In practice, commercial VPNs like NordVPN, ExpressVPN, or free services on app stores aren’t on the blacklist, and the IP change check can be avoided by staying connected to the same VPN server throughout the session. The fingerprinting step is also weak because Bybit doesn’t enforce strict hardware IDs or TLS certificate pinning.

That’s why the workaround shown in the CoinDesk video still works: a user connects to a U.S. IP, switches to a VPN server in, say, Estonia, and then completes KYC using an Estonian passport photo that belongs to a friend. Bybit sees a consistent Estonian IP and ID, and it lets the account through.

Comparison: Bybit vs. Other Major Exchanges

As you can see, Bybit sits in the middle. It’s stricter than a fully licensed exchange like Coinbase but less sophisticated than Binance’s dedicated VPN‑blocking service.

Security Implications of Weak VPN Detection

Geofencing isn’t just about obeying regulators; it also protects the exchange from a wave of high‑risk users who might be trying to hide illicit activity. When VPN detection is weak, two problems arise:

• Money‑laundering risk: Bad actors can mask their true location, making AML checks harder.
• Regulatory backlash: If a regulator discovers that a platform easily lets restricted users in, fines or forced shutdowns can follow.

Bybit’s biggest security headline in 2024 was the $1.4 billion hack on its SAFE Wallet the multi‑signature wallet used for user withdrawals on Bybit. The breach was traced to malicious code injected into the wallet’s front‑end, allowing attackers to masquerade as legitimate transactions. While the hack wasn’t directly linked to geofencing, it showed how a compromised platform can struggle to keep compliance tools up to date.

After the incident, Bybit hired Mandiant a leading cyber‑security firm acquired by Google Cloud to audit its security posture. Part of the audit included reviewing how well the exchange could identify spoofed IPs and VPN traffic. The report recommended adding machine‑learning models that flag irregular login patterns - a step Bybit has yet to fully implement.

What Traders Can (Legally) Do

If you happen to live in a restricted jurisdiction, the safest route is to respect the terms: do not use Bybit, or consider a compliant exchange that offers a local license (e.g., Coinbase, Kraken). Trying to hide behind a VPN violates the agreement and can trigger account closure. Even if you manage to trade, any profit could be frozen if the platform later identifies the violation.

For traders outside restricted zones, there are still best practices:

1. Use a secure, reputable device and keep your browser updated - this reduces the chance your traffic is flagged as suspicious.
2. Enable two‑factor authentication (2FA) to protect against account takeover.
3. Monitor your IP address regularly with tools like whatismyip.com to ensure you haven’t been unintentionally routed through a VPN server located in a blocked region.

Keeping your account clean helps Bybit maintain its compliance reputation, which benefits all users by avoiding sudden shutdowns.

Future Outlook: Toward Smarter Geofencing

Experts agree that basic IP blocking will soon give way to more nuanced systems. A February 2025 SSRN paper titled “Crypto Security in the Aftermath of the Bybit Hack” suggested three upgrades that could make Bybit’s fence harder to jump:

• Machine‑learning risk scoring: Analyzing login velocity, device entropy, and network latency to spot VPN‑like behavior.
• Device fingerprint aggregation: Combining browser, OS, and hardware data to create a unique user “signature” that persists across IP changes.
• Real‑time document‑IP verification: Using AI to compare the visual features of ID documents with the apparent location of the IP address, flagging mismatches automatically.

If Bybit invests in these tools, it could reduce the number of successful workarounds while still keeping the platform open to legitimate global traders. Until then, the onus remains on users to stay within the rules.

Key Takeaways for Traders

• Bybit’s geofencing blocks US and other high‑risk regions via IP lookups.
• Standard VPNs can still get you in; the detection is not yet advanced.
• Violating the terms risks account freeze and potential legal issues.
• Future upgrades may incorporate AI‑driven behavior analysis, making workarounds harder.
• For compliance‑focused trading, consider licensed exchanges if you’re in a restricted jurisdiction.