CFTC Charges BitMEX For Illegally Operating Crypto-derivatives Platform
By RTTNews Staff Writer | Published: 10/2/2020 10:15 AM ET
The Commodity Futures Trading Commission, or CFTC, has charged cryptocurrency derivatives exchange Bitcoin Mercantile Exchange or BitMEX for illegally operating an unregistered trading platform and for violating the anti-money laundering regulations.
A civil enforcement action was filed in the U.S. District Court for the Southern District of New York charging five entities and three individuals that own and operate the BitMEX trading platform in violation of multiple CFTC regulations.
This case is brought in connection with the Division of Enforcement's Digital Asset and Bank Secrecy Act Task Forces.
The regulator has charged Arthur Hayes, Ben Delo, and Samuel Reed, who operate BitMEX's platform through a maze of corporate entities. These entities, also charged, are HDR Global Trading Ltd., 100x Holding Ltd., ABS Global Trading Ltd., Shine Effort Inc Ltd., and HDR Global Services (Bermuda) Ltd. (BitMEX).
According to the complaint, BitMEX's platform has received more than $11 billion in bitcoin deposits and made more than $1 billion in fees, while conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers since beginning operations in 2014.
The CFTC alleges that BitMEX has failed to implement the most basic compliance procedures required of financial institutions that impact U.S. markets.
The CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution for the benefit of customers, permanent registration and trading bans, and a permanent injunction from future violations of the Commodity Exchange Act (CEA).
Simultaneously, the U.S. Attorney for the District of New York indicted Hayes, Delo, and Reed, along with Gregory Dwyer, on federal charges of violating the Bank Secrecy Act and conspiracy to violate the Bank Secrecy Act.
In response to both the actions, BitMEX said in a statement, "We strongly disagree with the U.S. government's heavy-handed decision to bring these charges, and intend to defend the allegations vigorously. From our early days as a start-up, we have always sought to comply with applicable U.S. laws, as those laws were understood at the time and based on available guidance."
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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.
Article reposted on Markethive by Jeffrey Sloe