BitMEX – the leading centralized crypto derivatives exchange announced that it’s out of the hot waters as it was successful in reaching a $100M settlement with the U.S. regulators – specifically the Commodity Futures Trading Commission (CFTC) and Financial Crimes Enforcement Network (FinCEN) on August 10. As part of the settlement, BitMEX will ban U.S. residents from accessing the derivatives trading platform.
U.S. prosecutors filed criminal charges against BitMEX four executives Delo, Reed, and Greg Dwyer including the top Arthur Hayes in Oct 2020, alleging that the exchange failed to comply with U.S regulations and couldn’t control the money laundering facilitation through the exchange. Since then, Mr. Hayes was reported to be on the run, though he still maintained public communication through his crypto-related blog posts via Twitter.
The specifics of the Bitmex case
The Department of Justice alleged at that time that BitMEX actions were in clear violation of the Bank Secrecy Act (BSA), which grants the Govt the power to engage in financial surveillance to prevent fraud, money laundering, and terrorism-related funding. BitMEX suffered also because of its ties in regulatory arbitrage, by dodging the regulators because of unclear interpretations around the nascent crypto industry.
BitMEX has signaled intent to move past this episode and has said that it’s embarking on “an ambitious business transformation under its ‘Beyond Derivatives’ strategy”. It will add five new business segments of spot, brokerage, custody, information products, and academy. For that purpose, the centralized exchange is bound to ramp up internal hirings and exchange expansion. The blog post also notes that BitMEX has made significant progress in user verification, Know your Customer (KYC) and Anti Money Laundering (AML) compliance, and working for market integrity.
Alexander Höptner, CEO of BitMEX also mentioned in a separate blog post on the settlement that crypto is moving fast, sparking fundamental changes at the grass-root level and is becoming more inclusive. He also noted that the industry is becoming more responsible, seeing how it can bring positive impact in all imaginable industries especially financial technology, intellectual property (IP) and record-keeping, etc. It’s for that reason that BitMEX is solving the legal matter to develop the platform further and keep contributing to the industry.