Ethena Labs has acknowledged concerns regarding its exposure to Bybit, with reports indicating that approximately $1.2 billion in assets could be at risk. However, Ethena emphasized that all spot assets backing its USDe are held in off-exchange custody solutions, including Bybit through Copper Clearloop, and that no collateral is kept on the exchange itself. The company reassured stakeholders that there is currently less than $30 million in aggregate unrealized profit and loss (PNL) related to Bybit. Bybit has also confirmed that all client assets are backed on a one-to-one basis, aiming to maintain confidence amid evolving circumstances. Ethena's strategy of using third-party custodians for its collateral is designed to mitigate risks associated with exchange exposure.