On Thursday (October 1), The U.S Commodity Futures Trading Commission (CFTC) announced that it had brought charges against “five entities and three individuals” that own and operate the crypto derivatives exchange BitMEX.
CFTC’s press release (“Release Number 8270-20”) said that the agency had filed “a civil enforcement action 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 with operating an unregistered trading platform and violating multiple CFTC regulations, including failing to implement required anti-money laundering procedures.”
It went on to say that the three co-founders of BitMEX—Arthur Hayes, Ben Delo, and Samuel Reed—were among those charged. The entities named as co-defendants are “HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited,and HDR Global Services (Bermuda) Limited (BitMEX).”
CFTC says that it is bring these charges because it believes that BitMEX is “conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers.”
CFTC Chairman Heath P. Tarbert had this to say:
“Digital assets hold great promise for our derivatives markets and for our economy. 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. New and innovative financial products can flourish only if there is market integrity.
“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.”
And Division of Enforcement Director James McDonald stated:
“As the CFTC has made clear, registration requirements are a cornerstone of the regulatory framework that protects Americans and U.S. financial markets.
“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.”
The CFTC mentions that it “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).”
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The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.
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