The Department of Justice and the United States Commodity Futures Trading Commission (CFTC) accused BitMEX, one of the most popular cryptocurrency exchanges in the country, of breaking the law and trading illegally.
According to US authorities, the exchange of cryptocurrencies BitMEX has been carrying out unregulated trading operations, violating the imposed banking management laws against illegal activities and money laundering, for which they filed charges against the exchange and its main executives. The United States Commodity Futures Commission (CFTC) request that BitMEX returns all profits obtained to its clients and users, and prohibits the exchange from providing its services or trading again.
“The CFTC charges BitMEX owners with illegally operating a cryptocurrency derivatives trading platform and violating anti-money laundering laws.”
For its part, the Department of Justice (DOJ) is also suing the exchange's directors, who face criminal charges for violating the Bank Secrecy Act, the Digital Assets Act, and anti-money laundering (AML) regulations. Among those accused are its CEO, Arthur Hayes; the co-founders of BitMEX, Ben Delo y Samuel Reed; the head of Business Development, Gregory Dwyer; and the corporations HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited y HDR Global Services (Bermuda) Limited, who in the opinion of the entity, offered financial services and derivatives negotiation with cryptocurrencies, illicit transactions to American clients.
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Deserters and fugitives
At press time, Reed, one of the co-founders of the exchange, has already been arrested, while the rest of the defendants remain fugitives from justice. Reed must appear in the United States District Court for the Southern District of New York to give statements and face the charges imposed. If found guilty of the alleged crimes, BitMEX executives may receive large fines of up to $250.000 and a maximum of 5 years in prison.
Faced with the strong accusations, BitMEX issued an official statement claiming that its cryptocurrency platform is operating normally and that users' deposited funds, which exceed $11 billion, are safe. BitMEX assures that since it began its operations in the United States, it has been concerned about respecting and complying with the laws of this country.
“We strongly disagree with the US government's heavy-handed decision to bring these charges and intend to vigorously defend the allegations. Since our early days as a startup, we have always sought to comply with applicable US laws, as those laws were understood at the time and based on available guidance.”
The exchange's statement also states that pending withdrawal requests were processed at 17:45 UTC on October 1, according to its regular procedures, as a measure to allay any concerns from BitMEX customers and users. The exchange will also process a second out-of-cycle withdrawal this October 2 at 08:00 UTC and then a third withdrawal at 13:00 UTC “as usual,” it reports.
11 billion dollars in Bitcoin deposits
In its statement, the CFTC alleges that BitMEX received about $11.000 billion in deposits with the cryptocurrency Bitcoin (BTC), in addition to raising another $1.000 billion, as a result of commissions and fees charged for operations on the platform.
“The BitMEX platform has received over $11 billion in bitcoin deposits and earned over $1 billion in fees, while conducting important aspects of its business from the US and accepting orders and funds from US customers. ”.
The authority requests that the cryptocurrency exchange return the funds and “ill-gotten” gains for the benefit of the exchange's users, and that the exchange respond to civil monetary penalties, trading prohibitions, and a permanent injunction for future violations of the Law of Commodity Exchange (CEA). The CFTC seeks to prohibit BitMEX from continuing its buying and selling operations with cryptocurrencies and commodities.
Likewise, the CFTC's allegations against BitMEX extend to its futures market, claiming that BitMEX executed futures transactions on an unregistered board, offering illegal options without being registered as a futures commission trader.
Effects of the accusations
The chairman of the CFTC, Heath P. Tarbert, states that digital assets “are very promising for our derivatives markets and for our economy”; Therefore, for the United States to position itself as a global leader in this space, it is imperative to eliminate illegal activity in these markets. Tarbert assures that the cryptocurrency and digital asset market will only prosper if there is integrity, which is why he ensures that the entity will not tolerate or condescend to bad actors who violate the law, such as BitMEX.
Likewise, the director of the Compliance Division, James McDonald, said that anti-money laundering and anti-money laundering registration requirements are a cornerstone of the regulatory framework that protects Americans and the country's financial markets, and that these are fundamental requirements that companies like BitMEX must fully comply with.
The regulator's two commissioners say the CFTC will continue to work vigilantly to protect the integrity of digital markets and protect users. Meanwhile, at press time, the price of Bitcoin suffered a drop of close to $260 USD in value, going from $10.870 USD to $10.610 USD per unit.
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