CFTC Sues BitMEX For Violating Bank Secrecy Act ; Bitcoin Bears The Brunt 

By Ketaki Dixit
October 1, 2020 Updated October 1, 2020
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Arthur Hayes, Ben Delo, and Samuel Reed, owners of BitMEX, have been charged by the Commodity Futures Trading Commission (CFTC) with “operating an unregistered trading platform and violating multiple CFTC regulations, including failing to implement required anti-money laundering procedures.”

According to a press release from the CFTC, five entities associated with the owners of the trading platform have also been indicted for violating the Bank Secrecy Act.

HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX) are some entities that operate with BitMEX owners and are defendants in the complaint.

BitMEX allows users to ‘Trade Bitcoin and other cryptocurrencies with up to 100x leverage.’ It is known to be the largest cryptocurrency derivatives platform with trading volume in billions of dollars. With BitMEX failing to register with the CFTC and complying with the rules set by it, thousand of users, including those in the United States, have jeopardized their funds.

The CFTC also urged users and traders to verify a trading platform’s authenticity and registration before handing over their funds.

According to CoinMetrics data, BitMEX has approximately $2 billion worth of Bitcoin in its vault.

No CFTC approval 

According to the complaint, the three owners of BitMEX were illegally offering commodity transactions, futures, options, and swaps on Bitcoin (BTC), Ethereum (ETH), And Litecoin (LTC). There were charged with operating a facility for trading without CFTC approval.

Additionally, they did not implement KYC or know-your-customer procedures, a customer information program, and anti-money laundering procedures, which is a requirement according to CFTC rules. BitMEX has been under CFTC’s radar since July last year, after which, the trading platform adopted a mandatory KYC policy only April this year.

The complaint stated,

“BitMEX has facilitated cryptocurrency derivatives transactions with an aggregate notional value of trillions of dollars, and has earned fees of more than over $1 billion since beginning operations in 2014.”

Rooting out illegal activities

In support of digital assets playing a part in boosting the economy of the United States, CFTC chairman Heath P. Tarbert said, “For the United States to be a global leader in this space, it is imperative that we root out illegal activity like that alleged in this case.”

He said that market integrity plays an important role in helping “new and innovative financial products” flourish.

“We can’t allow bad actors that break the law to gain an advantage over exchanges that are doing the right thing by complying with our rules.”

Ensuring that such activities are pushed out, is important both in the derivatives market, for the economy as a whole and in the digital asset market.

James McDonald, Division of Enforcement Director, said,

“Effective anti-money laundering procedures are among the fundamental requirements of intermediaries in the derivatives markets, whether in traditional products or in the growing digital asset market. This action shows the CFTC will continue to work vigilantly to protect the integrity of these markets.”

Bitcoin attacked by bears

Although the Bitcoin prices have seen slow and steady growth, following the announcement, Bitcoin saw a 1% drop, bringing it back to the $10500 zone. Other digital assets such as Ethereum, Polkadot, Bitcoin Cash, and XRP, among others, also experienced a vertical drop mimicking Bitcoin.

Source: CoinGecko

As reported by The Block, BitMEX’s spokesperson said that the platform intends to “defend the allegations vigorously,” adding that it has always complied with the regulations and laws set by the authorities.


Experienced writer and editor with a demonstrated history of working in the industry. Skilled in Copywriting, Web Content Writing, Copy Editing, Writing, Cryptocurrency News Writing, and News Editing.
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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