I actually just registered here to post this reply. Sorry to resurrect this old thread, but I came across this while searching for exactly this problem with my new Bass Big Muff Pi, and figured it might help someone else in the future.

I too had a brand new unit, and when activated the effect worked fine, but would not pass audio when bypassed.

I opened up the unit but nothing seemed wrong. The switch was solid, no loose wires and the solder points looked fine (I work on electronics for a living)

I was about to go return the unit when I was playing around with it and noticed that it would pass signal when I stepped on the footswitch without actually toggling it; ie. I held my foot on the switch just before it “clicks” and I could hear my bass through the chain.

I suspect that some of these footswitches get “sticky” and the internals don’t spring back and make contact when toggled.
What I ended up doing was actuating the switch just on/off/on/off a bunch of times, maybe 40 or 50. That seems to have solved the problem – I haven’t since had any issues with having no sound when bypassed. Seems very reliable now, and I am gigging with the unit no problem.

Just in case anyone else has this issue, try stomping the crap out of the switch and see if that fixes the problem.