Not being incorporated in the U.S. did not help the popular platform.

The U.S Commodity Futures Trading Commission, or CFTC, has charged the BitMEX derivatives exchange with operating an unregistered trading platform and violating anti-money laundering regulations.

According to a statement released Thursday, the CFTC filed a civil enforcement action in the Southern District of New York against five entities and three individuals who allegedly own and operate the exchange.

The individuals charged include Arthur Hayes, publicly known as the CEO of BitMEX, as well as Ben Delo and Samuel Reed. The CFTC alleges that these individuals are owners and operators of BitMEX through a “maze of corporate entities.”

The aforementioned corporate entities, who are also cited as defendants in the case, are HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited,Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX).

The CFTC seeks disgorgement, or restitution of all “ill-gotten gains,” civil monetary penalties, permanent trading bans and injunctions against future violations.

The commission believes that BitMEX has offered illegal leveraged trading services to retail traders to the tune of $1 trillion in notional value since its inception in 2014. Despite its success, the CFTC believes that the exchange failed to take “the most basic compliance procedures.” These include failure to register with the commission, and the lack of know your customer and anti-money laundering procedures.

In addition to civil charges, the U.S. Attorney for the District of New York indicted Hayes, Delo, Reed and Gregory Dwyer, BitMEX's head of business development, for violating and conspiring to violate the Bank Secrecy Act. If convicted, the executives could face a maximum of five years in prison and a $250,000 fine. 

According to FBI Assistant Director William Sweeney "One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just ‘a coconut.’ Thanks to the diligent work of our agents, analysts, and partners with the CFTC, [the defendants] will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time"

A statement by the Department of Justice reveals that Reed, BitMEX's CTO, was arrested on Thursday morning in Massachusetts. Hayes, Delo and Dwyer "remain at large.

Reports surfaced as early as July 2019 that the CFTC was investigating the exchange, in large part due to speculation that U.S. residents were able to use the platform despite a formal ban. BitMEX's Terms of Service explicitly prohibit residents of the U.S., certain provinces in Canada, China and a host of other countries from using the exchange.


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Recommended content


Recommended Content

Editors’ Picks

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Is Altcoin Season here as Bitcoin reaches a new all-time high?

Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.

More Altcoin News
Shanghai court confirms legal recognition of crypto ownership

Shanghai court confirms legal recognition of crypto ownership

A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.

More Cryptocurrencies News
BTC hits an all-time high above $97,850, inches away from the $100K mark

BTC hits an all-time high above $97,850, inches away from the $100K mark

Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.

More Bitcoin News
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange

Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.

More Shiba Inu News
Bitcoin: New high of $100K or correction to $78K?

Bitcoin: New high of $100K or correction to $78K?

Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP